Crude oil prices continued to rise on Thursday, moving closer to a potential resistance zone at the bottom of a large symmetrical triangle pattern. The day’s peak reached $72.82, testing resistance near the interim low from August 21. Following a breakdown from this triangle pattern on September 3, the recent advance represents a counter-trend rally against the earlier decline. Today’s rally has also reclaimed the 20-Day moving average at $71.99, with crude oil on track to close above this level, a position it has not held since August 30.
Triangle Breakdown and Resistance Levels
Despite the recent gains, the broader market pattern remains significant. The 50% retracement level at $72.19 marks the beginning of a potential resistance zone that extends to around $73.74, which corresponds to the 61.8% Fibonacci retracement. This zone is supported by a rising trendline at the triangle’s lower boundary, which has acted as support since December 2023. Since crude oil fell below this trendline two weeks ago, it may now serve as resistance.
Possible Retest of Recent Lows
If crude oil encounters strong resistance that drives prices down, it may retest the recent low of $65.65 and could decline further. Key support lies below this swing low, particularly around a long-term downtrend line that has been a crucial level since December 2021. The prior swing low at $68.49, along with a projected target of $63.30 from an extended ABCD pattern, currently serves as a reference for this support line.
The low from May 2023 is especially important as it marks the lowest price for crude oil since December 2021. A drop below this level would indicate a continuation of the bearish trend that began from the peak in March 2022, resulting in a lower swing low.
Moving Averages Signal Bearish Outlook
The overall bearish sentiment for crude oil has been further validated by a recent crossover of the 50-Day moving average below the 200-Day moving average. This crossover, which first occurred on April 11, suggests a continuing downward trend. Even with the current bounce, the bearish outlook remains intact. The initial target from the symmetrical triangle is around $43.66, indicating that the potential for lower prices persists, despite the ongoing short-term counter-trend rally.