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Weekly Bullish Signal
Notice that the price level around today’s low may have some significance. It is near a previously marked price level established by an interim swing low from December at $68.82. Also, last week’s high was at $68.97. Once resistance is surpassed in an advance that price area is typically tested as support in some form. Therefore, today’s low was a successful test of support, and last Friday’s high of $68.97 was a test of resistance. That is a sign of strengthening. Moreover, a bullish continuation signal was generated on the weekly chart with a rally above last week’s high of $68.96 on Monday. That showed strength and established the beginnings of an uptrend on the higher time frame weekly chart.
Drop Below $68.80 May Test 20-Day MA
Nevertheless, if a drop below today’s low follows, there is potential support around $68.37 and the significant 20-Day MA, now at $67.97. Initial signs of a bullish reversal in crude oil triggered last week on a rally above the 20-Day line and downtrend line. Notice that they were identifying a very similar price level by the time the bullish reversal triggered last Thursday.
Given the extent of the of the recent bearish correction where the price of crude declined by $15.36 or 19%, it seems likely the current developing counter trend rally has more upside to go. That correction on a percentage basis was the largest of the prior larger four bearish corrections in crude oil, starting with the drop from the April 2024 peak.
Upside Breakout Targets $70.61 to $70.79
If today’s high is exceeded, then crude oil looks like it heads towards the next higher target zone from $70.61 to $70.79. That range begins with the 50% retracement and ends with a prior resistance level. Also, included within the range is the 127.2% extended target for the rising ABCD pattern at $70.81.
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