Crude Oil Price Forecast: Holds Breakout Gains, Eyes Key Fibonacci Levels

Crude oil consolidated on Thursday following Wednesday’s upside breakout. It traded within a relatively narrow range from $67.25 to $68.30 and established an inside day. Despite the stall in the breakout rally, signs of strength were indicated. The day’s range was in the upper third of Wednesday’s trading range and prior resistance was successfully tested as support. Also, both the $67.41 five-day range breakout level and AVWAP line from January high held as support. Once prior resistance is shown as support, the trend should be ready to continue. Since a bullish reversal was triggered yesterday, the near-term trend points higher.

Bouncing from Strong Support

Support around last week’s swing low was marked by the confluence of an AVWAP line starting from the April trend low, the neckline breakout level of a double bottom that subsequently formed (prior resistance becomes support), and a rising trendline that is the bottom of a trend channel. A reversal from one side of the channel opens the door to the possibility of reaching the other side. Nevertheless, the presence of the channel increases the chance that lower targets may be reached.

Trend Points Higher

A decisive rally above $68.34 will trigger a bullish continuation, while potential resistance is defined by the convergence of the 200-Day MA and the 20-Day MA, between $68.89 and $68.92, respectively. But given the potential for upside momentum on a bounce off the bottom of the channel, that potential resistance zone should easily be broken. If it is not, that would not be consistent with a strong bullish reversal. Crude oil has done a good job of confirming the trend channel by hitting the top line on multiple days recently and finding resistance.

Above $70.14 Targets $71.73

Upside targets can be considered starting at the 38.2% Fibonacci retracement at $70.14, and the 50% retracement level at $71.73. The price zone around the 50% level is strengthened by an AVWAP level from the April 2024 swing high around $72.12. Crude oil might even reach the 61.8% Fibonacci retracement area at $73.31, possibly putting it near the downtrend line. A bullish reversal has the potential to reach the dashed midline line of the rising channel. Given the angle of ascent, the 61.8% targets look very possible.

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