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Measured Moves Matched
As shown on the chart, there have been two previous large downswings since the 2023 peak of $95.50. The first (A) found a bottom after a 29% price correction and the second ended after a 25.3% decline. As of this week’s low, the current bearish correction has crude oil down by 28%. Once there is symmetry between the swings, there is a chance for signs of support and the completion of the correction. It is another piece of technical evidence identifying a potential short-term low in crude oil.
Reaching Oversold Conditions
The relative strength index (RSI) has fallen to oversold levels and the test of support near the lower end of the trend channel is also a sign that the price of crude may be oversold. Nonetheless, selling pressure remains as the closing price today will be a new low for the bearish correction.
Upside Potential?
I decisive advance above Tuesday’s high of $61.88 would be needed for signs of strength that may continue. Once the lower blue channel line is exceeded to the upside the 38.2% Fibonacci retracement at $63.57 becomes a target. Also, Monday’s high at $64.05 is close by. If strength can be maintained above that level, the next higher target zone is around previous price support and the 50% retracement level at $65.41 to $65.27, respectively.
Since that price zone may have greater significance given the previous long-term support level (now resistance), it looks like there is a good chance it is reached if there is a bullish reversal before new lows. Then, after the 50% level, the 61.8% Fibonacci retracement at $67.37 and the 20-Day MA, now at $67.69, become the next upside target.
Bearish Continuation would Target $57.21
On the downside, the next lower price zone identified for potential support is from $57.21 to $56.37. Crude is well on its way to reaching the price zone and therefore it may do so, and it may be soon.
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