Crude Oil Price Forecast: Pattern Tightens Revealing Lower Top Pivot

Crude oil established a lower swing high last week at 71.79. Resistance for the week coincided with the price area around the 50-Day MA, now at 71.20. The subsequent bearish reversal this week established a continuation of overall choppy sideways price action. On Tuesday, the bearish pullback continued with a daily low of 68.28. A red box on the chart marks the price range of a developing consolidation pattern in crude oil. It suggests uncertainty following a breakdown from a large symmetrical triangle pattern in early-September.

Decisive Drop Below 66.86 is Bearish

A decisive decline below the bottom of the pattern at 66.86 may lead to a quick bullish reversal, as has been seen in the last two new swing lows, one in November and one in October. Or a decline to the September swing low of 65.65 tests support and the bottom of a downtrend price structure. That swing low was the lowest traded price for crude oil since early-May 2023. The May 2023 swing low of 63.67 anchors the next lower potential support zone along with the long-term downtrend line. The trendline begins from the 2008 peak of 147.08.

New Swing High is Key Pivot at 72.79

Last week’s lower swing high provides a new resistance level to consider for signs of strength. The top of the box is 73.27. However, last week’s high of 72.79 establishes a key lower pivot level as a rise above it would break a short-term pattern of lower swing highs and lower swing lows. In addition, crude would already have shown strength by reclaiming both the 20-Day and 50-Day MAs by then.

If the 71.79 price level can be reclaimed, and it is followed by further strength, the chance to break out through the top of the box improves. Given that trading continues below resistance at the bottom boundary line of the symmetrical triangle pattern, the 61.8% retracement level at 74.60 may be reached before encountering signs of resistance around the line.

Upside Breakout Heads to 74.60

If crude can reclaim the recent swing high, it will provide one signal for a bullish reversal. The bullish reversal would then be further confirmed on a rise above the 73.15 swing high, which is also the top of recent consolidation. If that happens then there is a possibility that demand will rise enough to improve the chance of rising above the bottom boundary line resistance. That could lead to a completion of a 78.6% retracement at 76.58, and possibly the 200-Day MA at 77.18.

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