Crude Oil Price Forecast: Above $61.78 Suggests Higher Prices

Support Test Persists

Crude oil has been testing support around the 20-day average for almost a week and did so again on Tuesday. The day’s low of $60.20 came very close to the 20-day, now at $60.06 and falling slightly. The low of the six-day range is $59.96 (C), a key near-term support level, while resistance sits at a five-day high of $61.78. At that low the 10-day average marks support as well, giving the price level added potential significance. It generated a higher swing low and therefore a setup for a rising ABCD pattern.

Upside Targets

The ABCD pattern provides an initial potential upside target above several key dynamic resistance indicators including two trendlines and the 50-day moving average. The top of the small range found resistance at a previous key support area marked by a horizontal line and now potential resistance, which gives credibility to the target zone. The 78.6% harmonic projection for the ABCD pattern points to $65.17. Together that target plus the 200-day line plus a price zone that has been both support and resistance in recent months could represent resistance once again.

Breakout Path

If buyers regain control with a sustained rally above $63.03, crude oil has a chance to go higher as that would put it back above the 50-day average, now at $62.16. The 200-day average at $65.42 and falling presents an initial topside target as resistance is likely on the next approach. For six days crude has held above the $59.96 swing low, and it is confirmed by two moving averages, further confirming its potential significance.

Trigger Levels

An advance above today’s high of $60.20 gives the next sign of strength with confirmation above Monday’s high and the top of the five-day range at $61.78. Then there needs to be signs of bullish momentum if crude is to have a chance at busting through the recent swing high of $63.03 (B). A rally above that high also exceeds the 61.8% Fibonacci retracement and puts crude oil on track for a potential breakout of two falling trendlines.

Downside Risks

The bullish scenario falters on a drop below $59.96, unless there is a quick recovery and continued signs of strength. Potential support is also represented by the 50% retracement at $59.72. If that level fails to hold then the 61.8% Fibonacci retracement becomes a potential downside target.

Outlook

The rally above $61.78 is key to getting out of near-term consolidation. Then, a rally above $63.03 is needed to confirm strength and higher price potential, while a break below risks $59.72. The six-day hold and ABCD setup favor bulls if $63.03 clears. Watch 50-day clearance — $65.42 follows on momentum. Today’s action keeps the rally alive if support as consolidation continued.

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