Short-Term Bullish Momentum and Inside-Day Breakout
Crude oil extended higher from an inside day above $88.98 on Thursday. A sharp advance followed the day’s low of $88.82. The low did not dip into Wednesday’s range before buyers drove the price of crude oil higher. That is short-term bullish behavior, along with a strong closing price near the high of the day at $97.24, suggesting continued bullish momentum. If bullish momentum continues, crude oil shows the potential to eventually test the 78.6% Fibonacci retracement of the recent two-day decline.
Upside Targets and Fibonacci Confluence
Lower upside targets start with the 50% retracement at $98.19. Thursday’s high almost reached that level. Above there is the 61.8% Fibonacci retracement at $103.23. These levels are only guides. Greater confidence comes from confluence, which is not apparent until the 78.6% Fibonacci retracement of the long-term downtrend that began following the 2022 peak of $131.31 is met near $115.78. That price area also completes a rising measured move that matches a strong rally that preceded a multi-year bearish correction. The correction resulted in a large bullish falling wedge that triggered during the March breakout.
Highs, Volatility, and Emerging Patterns
Given the clear bearish response that followed a high of $119.54, and the fact that it was close to the 78.6% Fibonacci retracement, it seems like a high may have been established. The high day ended in the lower third of the day’s range and showed a loss. If crude oil rises above this week’s high, it can certainly go higher given recent volatility. But it also seems likely that volatility will slow, allowing new patterns to emerge within a very large price range established following the wedge breakout.
Support Levels from Moving Averages
It is interesting to note that support for the pullback from Monday’s high was established near the 10-day moving average. This recognition from the market tells us that the 10-day moving average may be touched as support again. Then on Wednesday, the 8-day moving average was used as support, providing an initial dynamic support indicator for the sharp advance. Currently, it shows support near $84.75.
