Crude Oil Price Forecast: $57.21 Bottom Holds – Bull Reversal Targets $60.98

Thursday’s Holiday Breakout

Since bouncing off support at $57.21 earlier in the week (following the completion of an 88.6% Fibonacci retracement level at $56.16), crude oil is on track to end the week in a clear bullish posture. Although futures closed early due to the Thanksgiving Holiday on Thursday, crude oil triggered a breakout above a five-day high of $59.17 to reach $59.26 for the day, along with a higher daily low at $58.39.

The breakout was confirmed with a daily close above the breakout level, showing buyers in control. A breakout of consolidation, represented by an inside day on Wednesday, was also confirmed by Thursday’s advance and confirmation of a bullish reversal.

Reversal from Channel Support

The reversal has triggered following several days when support was recognized at the bottom trendline of a descending channel. Of note is the 88.6% Fibonacci retracement level at $56.16, which helped identify a trend low at $57.21 along with the lower channel line. That is a close match that was followed by an intraday rally and a closing price in the top half of the day’s range. More bullish price behavior. The continuation of that signal was seen with today’s bullish price action and a strong close for the session.

Key Resistance Levels Ahead

The top downtrend line subsequently becomes an initial upside target with the 20-day average at $59.68 also in sight. But given recent consolidation the 20-day line is not so useful as a decision level other than as a minor indication. The 50-day average at $60.63 marks a key area of dynamic resistance for the current downtrend. Along with the most recent lower swing high at $60.98, these mark the two key resistance levels that need to be broken before higher prices become more likely.

Outlook

If crude oil is going to have a chance of a second bull leg up from the October swing low of $56.41, it first needs to close above $60.98 and then above $61.43. A reclaim of the 50-day will have then occurred as well, further indicating that the bulls are getting more aggressive. Following a bullish reversal of the short-term declining channel, there is a chance that the momentum could spike in a similar fashion to what was seen following the first bottom in October. Symmetry in the two rising measured moves would be achieved at $63.83 (D). That presents both a potential initial upside target based on the pattern but also an area where resistance could turn price down.

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