Crude Oil Price Forecast: Crude Oil Tests Resistance, Awaits Bullish Breakout

Bruce Powers
Published: May 21, 2024, 20:33 GMT+00:00

A decisive advance above Monday's high of $80.64 would trigger a bullish breakout for crude oil above key moving averages and a downtrend line.

In this article:

Crude oil has been sitting in an interesting position recently as it has been consolidating up against resistance around the 200-Day MA for two weeks. The significance of the 200-Day line was increased today as the purple 20-Day MA has fallen to converge with the 200-Day line. Together, the two lines represent a formidable near-term resistance zone with a new high of the consolidation range marked yesterday at 80.64. Both the 200-Day MA and 20-Day MAs are at 80.24 and 80.28, respectively. In addition, a downtrend line was also successfully tested as resistance at Monday’s high.

A graph of stock market Description automatically generated

Rise Above 80.64 Triggers Bullish Breakout

A decisive advance above Monday’s high would be needed for a bullish signal. Such an advance would trigger a breakout above both moving averages plus the downtrend line. If it triggers after this week is complete, a weekly breakout is also indicated. Subsequently, a breakout should be followed by a test of support around the moving averages showing that prior resistance has become support. Once an upside breakout confirms with a daily close above 80.64, crude oil should be ready to advance. The first upside target would be the orange 50-Day MA and 50% Fibonacci retracement at 82.23 to 82.36, respectively.

Bottom of Range is 76.83

On the support side of the equation, the low of the range is at 76.83. It was successfully tested as support last Wednesday. Price was quickly rejected leading to a sharp intraday bullish reversal with crude oil ending in the green. Notice that it was followed by three higher daily highs into a new high for the small trading range.

Support has been seen recently around the uptrend line and 50% retracement. Most of the daily closing prices have either been above or near the trendline. Also, notice how buyers stepped up during attempts to drop crude oil below the consolidation range. Each of the three attempts, including today, were met with buyers who were able to push price higher to end the day in the top half or quarter of the day’s trading range thereby leaving clear bottoming tails.

On a weekly basis, a bullish reversal was triggered yesterday as crude oil moved above last week’s high of 80.24. A daily close above that price level will confirm the breakout, and further still if this week ends above it.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.

Did you find this article useful?