Bullish Reversal indicated above 2,681
A bullish reversal will be triggered after a decisive rally above today’s high of 2,681, at time of writing. Some technical damage has been done during the current decline as support first failed at the 20-day MA and then the 50-day MA. That was followed by a monthly bearish reversal of the October price range, dropping below the daily swing low of 2,602, which was also the monthly low.
These indicators all point to potential resistance levels on the way up, assuming today’s low holds. If not and today’s low is broken lower, it seems likely that crude will approach a possible support zone from 2,484 to 2,473. The highest level is a previous resistance top and is followed by the Fibonacci retracement level of 61.8%.
Brief dip below the 20-week moving average
It is also interesting to note that today’s decline briefly pushed the price of crude oil below the 20-week MA (not shown), which stands at 2,556. The 20-Week MA has maintained support almost 100% of the time since it was regained in the week of October 16th. It provides additional evidence for a potential low today, at least on a temporary basis. And it has proven to be a viable trend indicator and should continue to do so. This means that a drop below the current low will also confirm a breakdown of the long-term weekly moving average.
Need to rise above 2,619
Crude oil needs to rise and hold above Wednesday’s high of 2,619 to have a chance of moving higher. Resistance around the internal uptrend will also need to be watched as it is currently around yesterday’s high. That trendline should provide clues as it is also the lower support line for an ascending parallel trend channel. The channel shows symmetry within the uptrend. That symmetry was broken on the drop below the lower line, and the next lower trendline moves slightly lower on its way to the 200-day MA at 2,398.
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