Crude Oil Price Forecast: Tests Key Support Levels Amid Bearish Correction

Crude oil continued to retrace its prior advance on Thursday and tested key potential price support levels. At the time of this writing, the low for the day was 75.31 and trading continues to be bearish, taking place near the lows of the day. It looks like crude will end the day weak, in the lower third of the day’s trading range. Nonetheless, it has reached a potential support confluence zone. When there is confluence of indicators pointing to a similar price level those levels have the potential to be more significant than price levels without multiple confirmation.

Sitting at Potential Support Zone Till 75.31

The support zone goes from around 75.54 to 75.31. It begins with the 38.2% Fibonacci retracement level and ends with the 20-Day MA (purple). Moreover, the 200-Day MA, a long-term trend indicator, is marking a similar price area at 75.32. Although this price area is not yet showing signs of support it looks likely that it will be the low of Thursday’s trading session.

There will remain the possibility of a bullish reversal from that support zone unless there is a decisive decline below the 20-Day line. If so, the next lower target is a 50% retracement level at 73.73. Further down is a prior support and resistance area marked with a black horizontal line on the chart. The 61.8% Fibonacci retracement is a little lower at 72.32.

More Significant Potential Support Around 73.27

Either of those price levels could halt a bearish correction and lead to a bullish reversal. However, the more significant price support zone should be the 73.27 area, which was previously resistance and marked the top of a 10-Week falling consolidation range. Crude oil had a strong run recently and completed a measured move (purple) around the recent swing high at 80.76.

The prior measured move was the September 2024 upswing. Once there is symmetry in the price change a potential pivot level or resistance is identified. Further, a 78.6% retracement also completed near the recent high and marks potential resistance as well.

Sellers in Control

Certainly, sellers have taken back control since crude oil reached that high. Given that crude is showing six consecutive red candles indicates strong selling. Therefore, a deeper correction than what has been seen so far makes sense if crude is eventually going to take another shot at trending higher.

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