Crude Oil Price Forecast: Risk of Pullback Heightened

Consolidation Within Near-Term Pivots

Spot crude oil consolidated on Tuesday inside Monday’s range. The high for the day at $99.04 and the low of $94.24 provide near-term pivots. However, Monday’s price action showed downward pressure, resulting in a bearish engulfing candlestick pattern. A four-day high of $101.19 was reached on Monday before sellers took control. That high surpassed the 50% retracement at $98.19 and almost completed a 61.8% Fibonacci retracement of the prior downswing at $103.23. This shift from strength to selling pressure helps frame the current consolidation within a broader test of near-term direction.

Testing the 10-Day Average

The recent bearish retracement that followed last week’s peak of $119.54 confirmed support at the 10-day moving average, resulting in the rally to $101.19. A bearish engulfing pattern suggests that traders should be prepared for a decline and another test of support near the 10-day line. It is currently at $89.31 and rising. A break below today’s low would provide a bearish signal that could lead to further weakness, but a decline below Monday’s low of $93.18 would provide a more reliable confirmation of weakness.

Higher Lows and Potential Pattern Violation

Since the March 10 low of $76.83, there has been a series of higher daily lows and higher highs until Tuesday. A violation of that pattern would begin with a drop below Tuesday’s low, which would add credibility to the bearish engulfing pattern.

Tuesday’s high is a lower daily high, so a drop below the low of the day could mark the start of a series of lower daily highs and lower lows. Momentum could spike to the downside on a break, or it could remain subdued, leading to continued consolidation above the 10-day average. Since the 10-day average is rising sharply it may meet price before bearish momentum has much of an impact.

Upside Scenario and Fibonacci Targets

Alternatively, a decisive rally above Tuesday’s high is bullish and could lead to a breakout above this week’s high, targeting the 61.8% Fibonacci retracement at $103.23 or the 78.6% Fibonacci retracement at $110.40. As with all targets, they only provide a guide with no assurance that they will be reached without further bullish evidence emerging. In that context, the same consolidation highlighted at the start – defined by near-term pivots and a bearish engulfing signal – remains central, as resolution above or below this range will likely determine the next directional move.

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