Crude Oil Price Forecast: Will 200-Day Support Hold?

Support Test After Breakdown Pressure

Crude oil declined to a new corrective low of $74.12, thereby successfully testing support near the 200-day moving average at $74.37. Buyers took back control after that low and drove price back up into the upper half of the day’s range, where it remains at the time of writing. This action formed a potential bullish hammer candlestick pattern for the day, marked by a lower daily high of $77.11.

Key Structural Support Zones Under Watch

The 200-day moving average is joined by potential support from trend structure near $72.73. It was reclaimed in late January, and it has not been tested as support since the rally in crude oil surged sharply higher approximately one month later. This is the first significant pullback to test the 200-day average as support since then and therefore there is a good chance that support could hold, resulting in a bounce. However, if the $72.73 level is broken to the downside, the next lower target is the 78.6% Fibonacci retracement zone near $68.81.

Breakdown From Consolidation and Trend Shift

Crude oil confirmed a breakdown from a symmetrical triangle consolidation pattern last Thursday, with a daily close below the lower boundary line of the formation. In addition, the following session triggered a break below the 100-day moving average. That average was reclaimed in late January as well, and this marked the first real support test near the 100-day line since then. Of course, it failed, which suggested that the 200-day average was a lower target. Now that this key support zone has been reached, traders will be watching for signs of renewed demand.

Upside Levels and Reversal Triggers

This week’s high of $82.46 presents an initial upside target, along with a higher swing low at $81.94. If that high can be exceeded, a weekly bullish reversal signal will be generated. That would increase the chance for a test of resistance at higher levels. The more significant higher target is around $88.64 to $90.08, consisting of the 100-day moving average and the 20-day moving average, respectively. Also, included in the range is a weekly low of $88.90, forming a broader resistance cluster.

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