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Long-Term Support Being Tested
Recent support around $65.50 has some significance as it is near support from September of last year at $65.65, prior to the current decline, was the low price for crude oil since May of 2023. Following the 2023 low traded price, crude oil rallied to a peak of $95.50 before progressing lower and establishing a slow downtrend of lower swing highs and lower swing lows. Therefore, the drop to $65.50 recently established a slightly new low for the bear trend.
There are reasons to believe that support may be retained at that low and lead to at least a bounce before being challenged again. For one, the bearish correction from the $80.76 mid-January high was the deepest bearish correction of the prior four larger corrections, but not by much. There was an 18.3% decline from an August swing high, which was the largest decline of the four.
Rally Above 20-Day MA Would Show Strength
Although a bullish signal will be generated on a breakout of the double bottom, a potentially significant resistance zone is slightly higher from around $68.74 to $68.82. However, the 20-Day MA trend indicator, currently at $69.26, marks a more significant price area, along with a downtrend line. Since it is falling the 20-Day line may be within the price zone by the time it is approached. Subsequently, a lower swing high is at $70.81.
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