Resistance Zone Challenges Recovery Momentum
An initial advance following last week’s low hit a high of $76.61 on Wednesday, successfully testing the $76.83 spike low support zone from March 10 as resistance. That low has added significance since it was the first swing low established after the March peak. Additionally, key dynamic resistance is marked by the 200-day moving average near $78.61. Although it was reclaimed briefly intraday on Wednesday, the closing price remained near resistance from that average. This shows that longer-term trend resistance remains a significant hurdle for buyers.
On Thursday, however, a one-day bearish reversal triggered with the lower daily high of $75.29 confirming resistance near the 200-day average. The area near the 200-day average is also reinforced by the 20-day moving average near $73.90. Resistance near those two averages shows the downtrend is being retained and downward pressure remains.
Recovery Path Depends on Breaking Higher Resistance
Nonetheless, crude oil bounced from a strong support zone that completed a test of prior resistance for a long-term falling wedge pattern that broke out on March 2. Therefore, short-term weakness may resolve to the upside. A deeper pullback from Wednesday’s lower swing high of $76.61 could lead to a higher swing low. If that occurs, then a breakout above $76.61 looks more likely to hit higher targets.
Prior support from a symmetrical triangle consolidation pattern near $88.90 is the primary upside target if bullish momentum improves. However, before that price area is tested as resistance the next two targets of $79.23 and $81.94 need to be recovered. The first level is a lower swing high and the second a prior higher swing low. A successful move through these intermediate resistance levels would strengthen the case that the recent low represented the completion of the bearish retracement and the beginning of a broader recovery.
Source: Original Article
