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Lowest Price Since May 2023
Last week’s low was the lowest traded price for crude oil since a spike in volatility was seen during the first week in May 2023. It indicated the potential for a continuation of the downtrend that began from the September 2023 highs. Also, it marks a potentially significant support zone, particularly since crude has already fallen significantly in the current bearish correction.
What is the chance that new lows will see enough selling pressure to keep the price of crude falling? Certainly, it is less than it might be if crude was falling through long-term support from a closer beginning point, such as a bearish continuation pattern for example. Nonetheless, a decisive decline below $65.40 could see a drop to test support around the May 2023 lows.
Strength Indicated Above $67.27
On the upside, there are no signs of a potential bullish reversal until Tuesday’s high of $67.27 is exceeded. If that price level triggers, crude could test an interim swing high of $68.38. That swing high is part of the downtrend price structure. If it is reclaimed, then crude will show signs of improving demand and it will trigger a bullish reversal as a prior swing low will have been exceeded.
Depending on when it happens, a double bottom breakout may also trigger. The convergence of several lines around $70.23 will then define the next higher potential resistance zone. That zone includes a downtrend line, a rising trendline across support starting from September of last year, and a horizontal level from an interim swing low from late-December.
Key Resistance at 20-Day MA
However, the 20-Day MA, at $69.80 currently, defines the more significant potential resistance area. Keep in mind that since the 20-Day line is falling. Therefore, it may reach the price zone mentioned above prior to or when natural gas reaches the zone.
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