Crude Oil Price Forecast: Struggles at Key Support, Reversal Pattern Emerges

Downward pressure on the price of crude oil remained on Thursday. It is set to end lower for the day following an attempt earlier in the trading session to break out above Wednesday’s high. The low for the current decline was $65.50, which was $15.36 or 19% below the most recent swing high at $80.76. Since finding support crude has been consolidating above $65.50 for the past six days. The consolidation pattern has taken the form of a potentially bullish double bottom reversal pattern.

An upside breakout of the pattern will be signaled on a rise above the neckline of the pattern at $68.37. At the time of this writing crude continues to trade near the lows of the day, which was $66.45. And it could go lower before the end of the day. The high for the day was $68.03.

Long-Term Support Being Tested

Recent support around $65.50 has some significance as it is near support from September of last year at $65.65, prior to the current decline, was the low price for crude oil since May of 2023. Following the 2023 low traded price, crude oil rallied to a peak of $95.50 before progressing lower and establishing a slow downtrend of lower swing highs and lower swing lows. Therefore, the drop to $65.50 recently established a slightly new low for the bear trend.

There are reasons to believe that support may be retained at that low and lead to at least a bounce before being challenged again. For one, the bearish correction from the $80.76 mid-January high was the deepest bearish correction of the prior four larger corrections, but not by much. There was an 18.3% decline from an August swing high, which was the largest decline of the four.

Rally Above 20-Day MA Would Show Strength

Although a bullish signal will be generated on a breakout of the double bottom, a potentially significant resistance zone is slightly higher from around $68.74 to $68.82. However, the 20-Day MA trend indicator, currently at $69.26, marks a more significant price area, along with a downtrend line. Since it is falling the 20-Day line may be within the price zone by the time it is approached. Subsequently, a lower swing high is at $70.81.

For a look at all of today’s economic events, check out our economic calendar.