Crude Oil Tests Resistance Near 200-Day Average
Crude oil continued to strengthen on Tuesday, reaching a nine-day high of $62.58, as it further tested resistance near the 200-day average. The day’s low at $60.24 found support near the 10-day average, for the second day. This behavior is typically bullish when followed by strength. Today’s advance reclaimed the prior high of $62.39 from two weeks ago, placing a potential breakout in view. In addition to the prior high, the 200-day average at $62.59 is joined by a double bottom target at $63.00 and a 50% retracement level at $63.16. A swing high from October confirms potential resistance near the 50% area.
Breakout Above Prior High Could Confirm Trend
A decisive advance above the 50% area will confirm a breakout of the earlier levels and put crude oil on track towards higher prices. Recapturing the October swing high at $63.03 will provide another bullish trend reversal signal of price structure. Crude oil has been trading below the 200-day line since early August. That makes it strong potential resistance and a key pivot, as a breakout could see strong bullish momentum.
Upside Targets Defined by Fibonacci and Swing Highs
The next lower swing high above $63.03 is at $66.76 and it shows potential resistance from structure. However, a little below the $66.76 swing high is a target range from $65.09 to $65.23, consisting of a 61.8% Fibonacci retracement and 100% measured move target, respectively. The measured move is shown by the ABCD pattern on the chart.
10-Day Average Remains Key Short-Term Support
Since the 10-day average was tested today, it remains key short-term dynamic support. If crude oil prices stay above that average the short-term trend remains bullish and should progress to higher prices. A daily close above $62.39 will confirm a continuation of the advance from the December bottom. That outcome could occur as early as today. Therefore, short-term weakness will likely be used by traders to accumulate in anticipation of bullish upside follow-through.
Pullback Risk to 20- and 50-Day Averages
Weakening below the 10-day average looks likely to lead to a test of support near the 20-day average, now at $59.39. A little lower is the 50-day average at $58.79. Given the developing bullish evidence, a drop to the 50-day average would be expected to result in a bullish move, given the current trend structure.