Crude Oil Price Forecast: Key Levels Define Next Move

Support Test Sets the Stage

WTI crude oil successfully tested support near the 10-day moving average for the third consecutive day on Tuesday. After establishing a slightly lower swing high of $113.43 last Thursday, crude oil pulled back to a low of $101.40 on Friday and is attempting to confirm a higher swing low aligned with support near the 10-day line.

An inside day on Tuesday shows indecision and the retention of support near the 10-day average. If that average continues to hold as a support zone, then crude oil has a chance to go higher. Otherwise, sellers may regain control in the near-term. This ongoing test of support sets the tone for the next directional move, making the behavior around moving averages especially critical.

Bullish Trigger Versus Structural Weakness

A decisive rally above Tuesday’s high of $107.22 will give the next bullish signal, but it should be followed by a relatively quick recovery of Monday’s lower high at $109.36 to be successful. However, downward pressure remains as last week’s high completed an 88.6% Fibonacci retracement, the deepest of the retracement ratios. It also established a third consecutive lower swing high, which is a sign of underlying weakening, as each sequential rally has encountered solid resistance at a slightly lower price zone.

Near-Term Support and Breakdown Risk

Tuesday’s higher daily low of $102.72 marks immediate support, confirmed by the 10-day moving average, currently at $102.85. Therefore, a drop below that level increases the chance of a continuation of the bearish retracement that began last week, with a potential decline below $101.40. Key potential support would then be near the 20-day moving average, now at $98.21.

20-Day Test Could Reveal Demand

The market recognized the price zone near the 20-day moving average on the way up last Tuesday, as it consolidated near it before moving higher. This would be the first pullback to test support near the 20-day average since it was reclaimed and therefore signs of support would be anticipated. It also suggests that the reaction of price near the 20-day line should provide clues about supply and demand dynamics.

Deeper Support Defines Broader Outcome

Further down, there is the potentially more significant support zone near the 61.8% Fibonacci retracement at $93.97, along with the rising 50-day moving average, now at $93.55. The 50-day average is a key trend indicator, since it was successfully tested as support during the last decline. Taken together, the interaction with these key support zones will help determine whether the current consolidation resolves into renewed upside or a deeper retracement phase.