Crude Oil Price Forecast: Rally Nears Key Levels Amid Bearish Triangle Breakdown

Crude oil continued its rally to a new high on Tuesday before encountering resistance at 73.52. Following that high crude pulled back and may close weak, in the lower half of the day’s trading range. The high for the day was just shy of completing a 61.8% retracement at 73.74.

Resistance Seen at Bottom of Triangle Formation

Resistance was seen around the rising trendline at the bottom of a large symmetrical triangle pattern. Today’s 73.52 high may end a counter-trend rally following a breakdown from the triangle formation three weeks ago given that a test of resistance at the line has occurred. At the same time, the 20-Day MA was recaptured three days ago, and today’s trading range is fully above the 20-Day line.

These are short-term signs of strength that may lead to a test of resistance at higher prices. The 61.8% retracement at 73.74 is the next higher price level to watch, while a breakout above that level is followed by potential resistance around the falling 50-Day MA (orange), currently at 74.94. Notice that the 50-Day line has converged with the internal downtrend line as they point to similar resistance levels.

Eventual Turndown Anticipated

Given the bearish breakdown of the triangle pattern, crude oil is anticipated to eventually find resistance and turn back down to retest recent lows and possibly go lower. The long-term downtrend line, which represents potential support, was approached on the recent decline to 66.65, but it was not hit. Therefore, if a bearish reversal ensues the trendline may eventually be approached. A 33-month low of 63.67 can be watched for now as a proxy for the trendline. Notice that the trendline has not been tested as support since June 2023.

Rally Above 50-Day MA Would Counter Bearish Above Bearish Implications

Regardless of the bearish implications from the symmetrical triangle breakdown, that would start to change on a daily close above the 50-Day MA. Along with the 50-Day line keep an eye on how the month ends. Given that September will be ending shortly, the monthly chart may also provide clues. It is currently set up as a potentially bullish hammer candlestick pattern with a high of 75.19. Therefore, holding above the 50-Day line puts the monthly high in range.

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