Crude Oil Price Forecast: Pullback Sets Stage for Bullish Continuation

Short-Term Pullback and Trend Context

Crude oil dipped to a six-day low of $63.68 before finding support near the 61.8% Fibonacci retracement of the lates upswing. The pullback a confirmed bullish pennant breakout on a weekly closing basis, suggesting the first corrective move may be complete. Given the bullish intraday response after the day’s low, the first pullback should be complete. This sets the stage for a continuation of the bull trend, contained within a larger downtrend structure. In other words, an extension of the advance would be heading counter to the dominant larger bear trend and facing potentially strong resistance.

Support Structure and Moving Averages

A key component for a bullish argument is that the pennant consolidation pattern formed at support near the 200-day moving average. This confirms the recovery of the long-term average and strengthening of the developing uptrend. It is also useful to notice that Thursday’s drop broke below both the 10-day and 20-day averages before recovering to where the day may close back above them. The relationship of price to the 20-day average is one to keep an eye on. As momentum improves the 20-day average is set to define lower trend support as it did earlier in the advance.

Key Resistance and Upside Targets

If Monday’s trend high of $67.39 is exceeded with a daily close above it, another bullish trend reversal signal will have confirmed. That would put crude oil above a lower swing high at $66.77 from September. An upside limit to the current advance looks to be a top downtrend line and lower swing high at $71.33. Since the lower swing high is part of a larger downtrend structure, it has precedence as a potential pivot level.

Beyond that, a bullish measured move projects potential upside toward the $78.60 area, even though the rally may face resistance along the rising channel’s upper boundary.