Double Bottom and Trendline Breakouts Confirm Strength
Crude oil further confirmed strength on Tuesday, following the confirmation of a double bottom and trendline breakout on Monday. At the time of writing buyers remain in charge with trading continuing near the high for the day, currently $61.53. It looks likely that crude oil will end the day’s session in a similar bullish position. A higher daily low of $59.51 further confirmed strength, as it was the fourth consecutive day of higher lows and highs. Also, the early-session pullback into Monday’s range was minor, before buyers got more aggressive. In addition to the double bottom and 50-day average breakouts, Monday’s closing price confirmed a breakout of a downtrend line as well.
50-Day Average Reclaimed as Support
The 50-day moving average was reclaimed on Friday, with the breakout confirmed on Monday with a daily close above that line, now at $58.71. Monday’s low bounced off support near the 50-day line. That follows approximately five months of that average marking dynamic resistance for the downtrend. Once prior key resistance is confirmed as support, the trend should be ready to proceed. Evidence of that is being seen today. However, that will be followed by a first pullback to test prior resistance as support. In addition, prior resistance represented by the downtrend line was successfully tested as support with Tuesday’s low.
Reversal Signals Trigger Fresh Upside Momentum
Strong bullish momentum pushed crude oil straight through a first potential resistance zone on Tuesday, as it triggered a bullish trend reversal above a lower swing high at $60.56. It also exceeded a 100% projected target for a rising ABCD pattern, which was at $60.77. A daily close above $59.00 will confirm the trend reversal signal. That is the second reversal signal based on structure, with the first at the double bottom neckline (B).
Upside Targets Cluster Near Long-Term Resistance
Given the speed of the advance and conviction seen by the new breakouts, it looks like crude oil could continue to rise towards an initial upper target represented by the 200-day average. It is now at $62.65 and falling. That long-term resistance line is near several targets clustered around a 50% retracement level at $63.15. A measured move minimum target for the double bottom pattern is around $63.00 and a 161.8% projection of the rising ABCD pattern points to $63.24. Next up, though, is a 127.2% Fibonacci ABCD projection at $61.86.
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