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Measured Move Targets $68.52
It is interesting to note that a falling measured move completes at $68.52. The first measured decline began from the October swing high. Following that high the price of crude oil dropped by $12.24 or 15.5%. There will be a match in the two declines based on the price change if the $65.52 price target is reached.
Since that potential target is close to the $67.72 target, as well as the lower uptrend line, and bearish momentum is continuing, it seems like a good chance the lower price levels may eventually be reached before the current correction is complete. Moreover, crude oil could continue to fall further until it triggers a bearish breakdown on a drop below the uptrend line initially, with weakness confirmed on a drop below the $67.11 minor swing low from December 6.
78.6% Retracement Could See Support
Despite the potential bearish scenario, if support is seen around the 78.6% retracement area, a bounce could follow. In that situation, potential resistance would be around the 50-Day MA, now at $72.61. That price level is followed by $73.27, which was both support and resistance previously. Further up is the 200-Day MA at $74.83 and the 20-Day MA at $75.69. Keep in mind that the moving averages are dynamic and that the price represented will change.
Overhead Resistance May Stunt Rallies
Be aware that 200-Day MA is angled down and that the 20-Day only recently turned down after rising for approximately 35 trading days. Further, both moving averages are a little below a bottom boundary line for a large symmetrical triangle pattern. Together, these indicators show potentially significant resistance around the 20-Day MA, since it is above the 200-Day line currently.
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