Oil Price Forecast – Showing Early Signs of Possible Low

It is interesting to see that the price of crude oil was rejected today at the descending trend line support drawn across the bottom of the large consolidation range of the past year. Essentially, an exact hit. Subsequently, yesterday’s high was exceeded without a new low for the daily range, at least so far.

Oil Rises off Support Line

So, we now have the possibility of a one-day bullish reversal with a higher daily high and higher daily low. Possibly the very beginning of a sustained bottom. Yet, as the next step we need to see Wednesday close above Tuesday’s high to confirm strength.

Also, note on the daily chart that the 12-day exponential moving average (ema) is one way to identify dynamic resistance of the four-week downtrend and it can be used to identify possible resistance again, as well as for signs of strength if price rises above it and stays above the line.

Momentum Starts to Turn

The 14-day Relative Strength Index (RSI) momentum oscillator is supportive of a potential bottom in crude soon as it has now turned back up above the 30 level after being quite oversold. It reached the most oversold level since the June 2019 lows.

Drop Below Tuesday’s Low Signals Further Weakness

Today’s price action so far is not enough to say that the decline has ended, and the trend could certainly go lower. The first sign of this is on a drop below Tuesday’s low of $49.33. Oil would then be heading towards the next potential support zone of $47.57 to $47.08, followed by $45.16 to $44.99. Each of these levels are derived from multiple Fibonacci measurements and can be seen on the enclosed daily chart.

Intraday Price Breaks Above Moving Average

Looking at the enclosed 2-hour chart shows that there have been two minor bullish indications today as price has gotten above resistance of the 50-period ema and has exceeded a prior minor swing high of $51.53. In addition, there is a bullish RSI divergence in the 2-hour chart.