Crude Oil Price Forecast: Bearish Breakdown of Symmetric Triangle Continues

Breakdown from Consolidation Structure

Crude oil fell to a low of $86.97 on Thursday, as it confirmed a breakdown from a symmetrical triangle consolidation pattern that initially triggered on Tuesday. Support near the 100-day moving average was seen on Tuesday and it led to a short bounce. That bounce ended with Thursday’s high of $94.98, which successfully tested resistance near the top boundary line of a small falling trend channel that is inside the triangle formation.

A daily close below Tuesday’s low will confirm the bearish progression. However, Thursday generated a bearish outside day, which suggests further downside, and nonetheless strengthens the bearish case in the near term.

First Layer of Support and Reaction Zones

Lower initial targets start with a rising trendline and the April swing low of $81.94. That will be the next key pivot zone on a drop below Thursday’s low of $86.97. Conversely, the breakdown from the triangle consolidation pattern suggests lower potential targets. Those will include the 61.8% Fibonacci retracement zone at $79.65, followed by a prior swing low from March at $76.83.

Moving Averages and Structural Risk

A break of the 100-day moving average suggests a potential decline to the 200-day moving average, now at $73.98. Since the 200-day moving average was reclaimed in February, it has not been tested as support and given the significance of the March breakout from a long-term bullish wedge pattern, a test of support near the 200-day average remains a possibility, as long as there is risk of further downside.

Broader Trend Context and Deeper Support Zones

A deeper pullback in crude oil would better prepare it for its next bullish move, which may be a continuation of the wedge breakout. It should be added that potential support represented by the 200-week moving average is at $75.51, not too far from the March 10th swing low of $76.83. It further validates that price area as potential support. That will be the case until the 200-day moving average rises above that price range.

Resistance on Recoveries

Given the renewed bearish outlook, bounces are anticipated to encounter resistance and lead to renewed selling pressure. Key potential resistance zones are marked by the 10-day moving average near $92.96 and Thursday’s high.