Crude Oil Price Forecast: Rally Eyes Breakout Towards $89

It is looking like crude oil may be ready to continue its upward ascent after only a short one-day pullback. The highest close of the rally is on track to occur today and crude has gotten back above the long-term downtrend line. Resistance was seen around the line at the current trend high of 84.64 hit on Tuesday. Maybe upward momentum can be sustained for a move through that high before there is a deeper retracement or another consolidation phase.

16.4% Rally in Four-Weeks

Crude had risen by 11.91 points or 16.4% as of this week’s high, when starting from the June 4 swing low at 72.73. That swing low completed a test of support at the bottom of a large symmetrical triangle consolidation pattern. Subsequently, the weekly high this week found, what is now looking like, short-term resistance at the top of the large triangle. A bullish breakout of the pattern may be coming next. It will occur on a rally above 84.64.

Large Symmetrical Triangle Breakout Likely

The triangle reflects an overall contraction of volatility in the trading range for crude oil. A continuation of the current bull trend will therefore also signal a bullish breakout of the symmetrical triangle. What may follow could be what the bulls have been waiting for as it is a large triangle. The larger the consolidation pattern, the greater the potential impact.

Measured Move Target

Let’s consider a measured move to assist in identifying a potential target. Several have been identified over the past year or so and are highlighted on the chart in green. It becomes quickly apparent that they range from advances of 22.5% to 30%. The current advance would match the smallest measured move of 22.5% around a price target of 89.23. It turns out that price target is within a Fibonacci target range from 89.03 to 89.58 or so.

If the analysis is correct, then crude may continue to surprise to the upside until the target is reached. Notice that crude will have to rise above the 87.90 swing high from early-April to get to the target zone. That would trigger a bull continuation for the larger rising trend that began from the December 2023 swing low. In the long-term, a breakout above 84.64 signals the breakout of a large bull pennant.

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