Crude Oil Price Forecast: Eyes Breakout as Key Resistance Holds at 73.27

Crude oil has been attempting to break through a resistance zone with a high of 73.21 the past couple of days and it did so again on Thursday. Today’s high was a 17-day high. The 73.21 level is from the 50% retracement of the previous downswing, while today’s high was 73.27. Although not a breakout above the 50% level, it is an initial attempt to rise above an interim swim high of 73.15 from October 24.

That high is part of the price structure of the recent downswing. A rise above it, followed by a daily close above, would provide a sign of strength. Instead, today’s breakout attempt is showing signs of failure as the sellers took back control for the day after resistance was hit at 73.21, at least for the near-term.

Signs of Strength

Signs of strength in the price behavior of crude oil have been seen recently. Both the 20-Day and 50-Day MAs were reclaimed this week, and each day crude has closed above the line since. Further, it looks likely that today will be the fourth day in a row where the day ended above those two moving averages. Also, notice that the two lines recently converged and identified a similar price at the breakout day and since then. This doesn’t happen all the time but when it does it can identify a more significant pivot level.

Wednesday’s low of 70.15 is near-term support. A break below it will signal weakness and likely be followed by a move lower. Last Friday’s low at 69.87 can also be watched for Friday, as it also marks where the two trendlines cross. Although today’s breakout failed to progress, it shows strength as yesterday’s high was exceeded thereby providing a higher daily high, and today’s low of 71.05 is a higher daily low relative to yesterday.

A decisive breakout above today’s high may be successful in seeing a rise to higher price levels. If a breakout is sustained the 61.8% Fibonacci retracement points to the next target, followed by a price zone from 76.58 to 76.72. That zone is the 78.6% retracement level and previous interim swing high, respectively.

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