Crude Oil Price Forecast: Strengthens as Buyers Challenge Key Resistance Levels

Crude oil showed strength on Tuesday as it continued to challenge a resistance zone that includes an internal downtrend line. This follows a bearish candlestick pattern from Monday, including a close near the lows of the day. Following a quick drop below yesterday’s low early in today’s session, buyers stepped up and pushed crude higher to 74.70, at the time of this writing.

It is on track to close strong, near the top third of the day’s range, and possibly at the highest daily closing price for the current advance. Despite Monday’s bearish candle, today’s price action shows demand remains strong for crude oil. Whether that translates into higher prices remains to be seen.

Strength Returns

A continuation of the rally will be signaled on a move above yesterday’s high of 75.19. However, there is another potential resistance zone a little higher from around 75.78 to 76.47. It is important to recognize that the potential resistance zone is a confluence zone that includes the 200-Day MA at 75.85 and the 78.6% retracement level at 76.57.

Further, the 200-Day line has recently converged with the bottom boundary line of a large symmetrical triangle pattern. It is interesting that the rising trendline and 200-Day line have converged now that crude is approaching that price zone. This could represent more significant resistance than what has been seen so far during the rally since the lines have lined up.

Strong Momentum

Momentum, as shown in the relative strength index (RSI) oscillator can also be considered. Note that the indicator has reached its highest reading since April last year and it has not yet gone into overbought territory, above 70. This shows strength in demand and provides supporting evidence for further strengthening. A rise above a 70 reading will put the indicator into overbought territory as the price of crude oil is approaching the next higher resistance zone. Notice that that last overbought readings were in April 2024.

Support at Day’s Low of 73.29

Despite the above potential bullish short-term thesis, resistance may continue to stop the ascent near current prices and lead to a pullback. In that scenario a decline below today’s low of 73.29 is a sign of weakness. Key price levels to watch for support would then include the interim swing high at 71.79 and the 20-Day MA, now at 70.94.

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