Crude Oil Price Forecast: Key Support Test May Revive Bull Trend

Critical Support Zone Faces Major Test

Crude oil fell deeper into a key support zone during Thursday’s session, bringing price close to completing a round trip from the sharp bullish breakout that triggered on March 2. A decline below the 78.6% Fibonacci retracement level at $68.81 led to a new trend low of $67.73 before buyers regained control. The session is on track to end near the high of the day, currently $69.50, with an attempted recovery above Wednesday’s low of $68.65 to be confirmed by a daily close above that level. That recovery attempt highlights the importance of the support zone now being tested.

The 78.6% Fibonacci retracement marks the upper boundary of a key support zone, which includes a downtrend line and a prior resistance range from early this year near $66.57. Thursday’s low of $67.73 tested the Fibonacci zone, while Wednesday’s low of $68.65 also respected the area, as selling pressure stalled there. This price zone is near where bullish momentum kicked in with a breakout of a large bullish wedge formation that marked a multi-year bearish correction from the 2022 peak near $131.31. There has been one leg up since that breakout and following this first significant retracement, another leg up remains a possibility.

Recovery Depends on Buyers Defending Support

Given the sharp bearish reaction that followed the breakdown from a symmetrical triangle pattern three weeks ago, a successful defense of support followed by renewed buying interest could trigger a strong bullish reaction. As of Thursday’s low, the price of crude oil had declined by approximately 43.5% from the March peak of $119.54 and by around 23% from the triangle breakdown level. The significance of the decline below the weekly low of $88.90, which triggered the bearish breakdown, was reinforced by a concurrent drop below the 20-week moving average.

Long-Term Bullish Structure Remains Intact

The current pullback is the first since the significant bullish breakout triggered and therefore strengthens the potential for an eventual continuation of the long-term bull trend that could ultimately challenge the 2022 high of $131.31. Whether Thursday’s test of the support zone proves to be the completion of that round trip will become clearer if buyers start to reclaim lost ground over the coming sessions. Before any challenge of the 2022 high, however, the first objective would likely be a rally back toward resistance near the triangle breakdown level of $88.90.

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