Crude Oil Price Forecast: Reversal Signals Challenge Key Resistance

One-Day Bullish Reversal Tests Downtrend Resistance

Crude oil triggered a one-day bullish reversal on Thursday, reaching a high of $58.71 at time of writing. That put crude on track to again test resistance near the 50-day moving average, now at $58.76, and a lower swing high at $59.00, as well as an internal downtrend line. Trading continues near the highs of the day, and crude could extend before the session ends.

Strong Daily Candle Signals Improving Short-Term Demand

A wide range green candle is set to complete today, reflecting strong short-term demand but within a four-week price range. If crude oil can end the day above the closing price from December 3 at $58.61, it may have a better chance for higher prices in the near-term. That closing was the highest in 19 days and a daily close above it would further suggest that the buyers are starting to exert control over the price of crude and support the likelihood of a bottoming formation completing soon.

Potential Higher Swing Low Raises Breakout Odds

The one-day reversal established a potential higher swing low in gold and therefore an increased possibility that the $59.00 resistance area may be taken out. Of course, that would also confirm a reclaim above the 50-day average and set the stage for a possible continuation higher as the early signs of a trend reversal kick in. A daily close above 59.00 would trigger the reversal and breakout of a double bottom pattern. After that there needs to be additional signs of strength to indicate that the price of crude oil might continue to rise from there.

Upside Targets Defined by ABCD Pattern Structure

If an upside breakout triggers, the first target zone is the lower swing high at $60.56 along with the 100% completion of a rising ABCD target a little higher at $60.77. The 127.2% projected target for the pattern points to a potential target at $61.87, which is confirmed by prior support and resistance. Specifically, the price area is marked by a lower swing low in early September and a minor lower swing high in early November.

Weekly Chart Shows Early Bullish Reversal Signals

There is also bullish sentiment expressed in the weekly chart, as a potential bullish engulfing candle and outside week are set to complete if crude remains strong into Friday’s close. A weekly close above last week’s high of $58.65 would confirm a one-week reversal. That would also be counter bearish sentiment indicated by the prior two-week candles, as each ended with a bearish inverted hammer pattern, closing in the lower third of the weekly ranges.

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