Spike to Multi-Year High and Key Reversals
The price of crude oil spiked to a multi-year high of $82.23 on Thursday, exceeding a key potential resistance range with a high of $80.76. From the recent $55.00 swing low, the price of crude oil advanced by $27.23 (or 49.5%). Two bullish reversal signals occurred during the advance. First, on a rally above the $78.44 lower swing high from June 2025, and then on the advance above the January 2025 peak. This suggests that following a bearish correction, crude oil may continue to have an upward bias.
Reclaim of the 200-Week Average Signals Longer-Term Strength
A more significant sign of improving longer term strength was indicated by a reclaim of the 200-week moving average at $76.10. The breakout above the indicator will confirm on a weekly close above the 200-day average, which looks likely. Daily timeframe confirmation occurred Thursday. Crude oil has traded below the 200-week average since it dropped below it in late July 2024. This makes the reclaim of the 200-week average a significant development.
Double Bottom Pattern Supports Bullish Reversal
In addition, the advance above the swing high at $78.44 triggered a large double bottom pattern. A breakout of that pattern provides additional technical evidence supporting the possibility of a long-term bullish reversal.
Follow-Through Will Determine Trend Strength
Despite the longer-term bullish implication of today’s price action, follow-through will provide important indications. If support is retained at or near the 200-week average, bullish continuation may result. A failure of support at the 200-week average could lead to a deeper decline and test of support near the long-term downtrend line. Currently, it is approximately $70.49, which matches Tuesday’s low.
Comparing Prior Upswings Confirms Buyer Strength
Another sign of strength can be seen when comparing prior upswing within the larger downtrend structure, beginning from the $131.31 peak in 2022. Specifically, the most recent rally that began in April 2025 completed a 42.4% advance. The prior advance from 2023 completed a 50% advance. Note that the current rally is almost an exact match of the largest upswing within the long-term downtrend. This provides further evidence that the buyers may be taking control of the long-term trend.