Crude Oil Price Forecast: Stuck in Consolidation, Testing Key Support Levels

Crude oil remains within a rectangle consolidation pattern as it continues to test support at the bottom of the pattern. However, some progress was made on Thursday as a daily bullish reversal triggered with an advance above yesterday’s high of 69.06. If crude can maintain support and see demand improve it has a chance to rise again and test resistance around the top of the rectangle formation.

The top of the pattern is at last week’s high of 73.27, and support at the bottom is 67.11. Each of those price areas has been tested over at least several days. Until crude breaks out of the pattern, either up or down, it remains in consolidation and will likely see a continuation of choppy moves.

Bearish View

First, let’s consider the bearish side. Crude broke down from a large symmetrical triangle in early-December. Following a swing low of 65.65 it rallied back into the pattern structure. Nonetheless, it subsequently dropped back below the triangle, which is where it remains. Therefore, the potential for a bearish continuation of the triangle breakdown is the dominant pattern playing out. In addition, notice the head and shoulders continuation pattern that has formed since the breakdown. The pattern structure is marked with red arrows on the chart.

Breakdown Triggers Below 65.65

A decisive breakdown through the bottom of the triangle at 65.65 triggers a potential bearish continuation of the trend. Next up will be the September low of 65.65, and if that fails to hold, crude is heading towards lower prices. The next lower target is then around 69.82 to 63.30, which starts with the lowest traded price since the beginning of December 2023.

That range coincides with potential support around the long-term downtrend line. Further support for the bearish view is exhibited in the monthly chart (not shown), as crude triggered a breakdown below the 200-Month MA in September and it remains below that line.

Upside Breakout Targets 73.27

On the upside, a decisive breakout above 73.27 could see crude rally into the 61.8% Fibonacci retracement at 74.60. That price area coincides with the convergence of two trendlines that may continue to act as a resistance zone.

For a look at all of today’s economic events, check out our economic calendar.