Crude oil prices remain under pressure, hovering near the critical $65.50 support level. After a sharp 19% decline from the $80.76 swing high, the market is now consolidating within a potential double bottom reversal pattern. While this suggests a possible bullish breakout, key resistance levels, particularly $69.26, may challenge upward momentum.
Oil Prices Struggle Amid Consolidation
Despite an early attempt to break above Wednesday’s high, crude oil ended lower on Thursday, extending its bearish momentum. The $65.50 level has now acted as a support for the past six days, with price movement forming a double bottom pattern, signaling a potential reversal.
- A breakout above $68.37 (the neckline of this pattern) would confirm bullish momentum.
- However, at the time of writing, crude oil remains near daily lows around $66.45, with the session’s high reaching $68.03.
While the market is testing this critical area, further downside movement before a recovery remains possible.
Key Technical Levels to Watch
- Support Zone Holding Strong
- $65.50 remains a critical support as it aligns closely with the September 2023 low of $65.65, marking one of the lowest price points since May 2023.
- This level previously acted as a launching point for a significant rally to $95.50, highlighting its historical importance.
- The latest decline has established a new bear market low, but strong support at this level suggests a potential short-term bounce.
- Resistance Levels in Focus
- Breakout Confirmation at $68.37 → A close above this level would activate the double bottom pattern, signaling a potential trend reversal.
- Near-Term Resistance Zone: $68.74 – $68.82 → Expect some selling pressure here before a breakout attempt.
- Stronger Resistance at $69.26 (20-day Moving Average) → This key technical indicator aligns with a broader downtrend line, making it a major hurdle for buyers.
- Potential Rally to $70.81?
- If crude oil clears $69.26, momentum could build toward $70.81, marking a significant test of bullish strength.
Market Outlook: Is a Reversal Incoming?
- Bullish Case: A confirmed breakout above $68.37 would validate the double bottom pattern, setting the stage for a move toward $70+ in the short term.
- Bearish Case: Failure to hold $65.50 could trigger further declines, potentially pushing oil prices toward new bear market lows.
With technical signals pointing toward a possible recovery, traders should closely watch price action around $65.50 and $68.37 for confirmation of the next major move.