Crude Oil Price Forecast: Faces Pullback After Hitting Resistance

Bruce Powers
Updated: Jun 13, 2024, 23:28 GMT+00:00

Crude oil reached resistance at 79.46, forming a shooting star candlestick pattern, indicating a potential pullback as it remains in a downtrend.

In this article:

Crude oil reached an initial top target zone yesterday before selling off to end the day in a weak position Wednesday ended with a shooting star candlestick pattern that points to a likely pullback from that high. Wednesday’s high of 79.46 was an exact test of resistance at the long-term downtrend line. That line begins from the 2022 peak. A failed bullish breakout of the line occurred in April, leading to a decisive decline below the line. This tells us to watch that line going forward as the market has recognized it again.

A graph of stock market Description automatically generated with medium confidence

20-Day Support Holds

Nevertheless, Thursday’s low of 77.82 tested support around the 20-Day MA and it held. If today ends above the 20-Day line crude oil will have four daily closes above the line since breaking above it on Monday. That is a bullish clue. The rally from the recent trend low of 72.73 was an impressive 9.25% in only six days. If crude continues to hold above the 20-Day line, it has a chance to further test resistance and possibly break the trendline once more.

Wednesday’s rally hit the lower part of a resistance zone that goes up to the most recent swing high of 81.0. The short-term downtrend line is included in the zone. It was busted yesterday but the day’s close was below the line. So, the significance of the breakout was not confirmed. The 200-Day MA is at 79.88 currently, followed by the 50-Day MA at 80.50. Notice that the 50-Day line (orange) converged with the internal uptrend line today. They are each marking the same price level.

Downtrend Suggests Key Decision Point

Yet, crude remains in a downtrend and saw resistance at the downtrend line, which confirmed that the downtrend remains dominant. This could lead to a deeper pullback from Wednesday’s high. Potential lower retracement price levels are marked on the chart with the 50% retracement being highlighted. That is because there is a trendline at the bottom of a prior small broadening formation that runs through the 50% zone. Two indicators identifying a similar price is a notice to pay particular attention to this price zone if it is approached.

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?