Crude Oil Price Forecast: Bullish Momentum Builds Inside Triangle

Higher Swing Low Signals Strength

WTI crude oil established a higher swing low near $78.56 this week, as it found support at a confluence of technical indicators. A 61.8% Fibonacci retracement was close to completing, while the 20-day moving average also provided support, helping trigger a subsequent move higher. During Thursday’s session, crude oil advanced to a four-day high of $86.53 but failed to hold those gains.

However, the session still showed underlying strength, with its full range remaining clearly above the 50-day moving average for the first time in four days. That followed a quick reclaim of the 50-day moving average and a daily close above it on Wednesday, after a brief period below it over a few sessions.

Momentum Meets Overhead Resistance

The successful test of support at the 20-day moving average reinforces short-term bullish momentum, while the reclaim of the 50-day moving average suggests the intermediate trend is strengthening. The next upside target is near a swing low associated with the recent bearish consolidation breakdown signal of $88.90, followed by the 100-day moving average at $91.13. If resistance is encountered at the 100-day moving average, a lower swing high may result. Such a development would fit the current price structure, since crude oil is contained between two boundary lines angled towards each other, forming a rough symmetrical triangle pattern.

A Triangle Nears Its Decision Point

Although the pattern is not perfectly formed, it suggests that consolidation could continue in the coming weeks, or until a sustained breakout occurs through one of the boundary lines. Be aware that this could lead to less reliable signals from moving averages in the short-term. Given the broader bullish long-term trend that is unfolding, the expectation is for an eventual resolution to the upside, although the triangle leaves room for either direction in the near term.

Last week’s lower swing high of $94.38 is a key price level, as it represents another lower swing high and has recently been confirmed as resistance. A move above that level would therefore provide an important bullish signal and could help resolve the current consolidation to the upside.

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