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Crude Oil Price Forecast: Eyes Bullish Targets

FXEmpire.com -

Crude oil rallied above potential resistance around the combined 20-Day MA and the 61.8% Fibonacci retracement on Monday, and then closed above it. Today, that price zone was tested as support and breached briefly before buyers took back control from a low of 77.39 earlier in the session. Subsequently, last Friday’s high of 78.45 was exceeded slightly to reach a new trend high of 78.52. This would seem to indicate that the bounce in crude may not be done.

Holds Above 20-Day MA Support

The 20-Day line is at 77.77. If crude ends today above the line today, upside targets become more likely. A bullish trend continuation signal would then be generated on a move above today’s high. It looks like a test of the 200-Day MA at 79.96 could be the upside for the move. Lower potential resistance areas are near the trendlines on the chart. In addition, keep an eye on the 78.6% Fibonacci retracement at 79.23. Once the 61.8% price target is exceeded the 78.6% price zone becomes more likely to be reached. Notice that the price level is confirmed by the January 29 swing high.

Bullish Weekly Reversal Triggered

It may be that last week’s low of 72.73 completed the retracement. But crude remains in a downtrend and could test lower price levels if resistance turns it back down. However, the weekly chart shows an improving short-term bullish environment as well. On Monday, crude triggered a bullish weekly reversal as last week’s high of 77.81 was exceeded. Monday confirmed the advance with a close above the high.

Deeper Retracement Indicated on Drop Below 77.39

If a deeper pullback comes before a test of resistance at higher prices, a drop below today’s low of 77.39 will provide a signal. A prior weekly support level is 76.60, while a little lower is the 38.2% Fibonacci retracement at 76.31. That is followed by the 50% retracement at 75.62. Also, notice the small lower trendline across the bottom of the most recent consolidation period, which was a broadening formation. It can be used as a guide if the price zone is approached.

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This article was originally posted on FX Empire

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