Crude Oil Price Forecast: Eyes Reversal as Bullish Signals Strengthen

Crude oil established a higher swing low on Tuesday as a one-day bullish reversal triggered. The advance followed a new higher swing low of $55.81, the low from Monday, and reached a high of $60.04. If that low price continues to hold as support, it could be the second bottom of a potential double bottom formation.

Regardless, bullish behavior on Tuesday improves the chance that at least a short-term bounce may have a little further to go. At the time of this writing, crude oil continues to trade in the top third of the day’s trading range. It is on track to end the session with a wide range green body candlestick pattern, showing buyers in control at the close.

Downtrend Dominates

There is a good chance of seeing a test of resistance around the 20-Day MA, now at $61.28. The 20-Day line was successfully tested as resistance twice prior to last week’s sharp drop that triggered a bear flag pattern. Therefore, the behavior of the price of crude oil around the 20-Day line may provide insight into demand and whether buyers are aggressive enough to lead to a reclaim of the 20-Day MA. If the 20-Day line is reclaimed with a daily close above the line, higher price targets can begin to be considered.

Higher Possible Resistance Zones

The 61.8% Fibonacci retracement is a little above the 20-Day MA at $62.01. If it can be surpassed the 78.6% retracement zone around $63.47 becomes a target. Last week’s high was above the 78.6% level at $64.06. Both on the daily and weekly time frames, a bullish reversal won’t be indicated unless there is a decisive advance above that weekly high.

On the daily chart, it shows as the recent lower swing high and the first pullback following the recent $65.32 peak. Subsequently, it would not be surprising to see some back and forth between this week’s low of $55.81 and last week’s high before there is a more definitive reversal. Of course, that assumes there are further signs of strength before there are new lows seen in the price of crude oil.

Higher Daily Low Established

Tuesday’s low of $57.24 is near-term support and a higher daily low to go along with the day’s higher daily higher. Short-term pullbacks into Tuesday’s range may be used as opportunities to accumulate positions by larger investors. Nonetheless, crude oil could see a period of consolidation before it is ready to generate a bullish reversal.

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