Crude Oil Price Forecast: Reversal Signals Emerge Near Key Resistance as Rally Shows Signs of Exhaustion

Crude oil’s recent upward momentum appears to be losing steam as prices approach a critical resistance zone, raising the risk of a technical pullback. A bearish shooting star candlestick pattern has now formed, casting doubt on the strength of the rally.

WTI Crude Hits Multi-Month High, Faces Strong Resistance

West Texas Intermediate (WTI) crude oil climbed to a new multi-week peak of $77.15 on Thursday, marking its highest daily close since late January. This level aligns closely with the 88.6% Fibonacci retracement of the previous decline, which stands at $77.85. However, despite the breakout attempt, crude struggled to secure a decisive close above a key rising trendline that has acted as resistance for five consecutive trading sessions.

Adding to the cautious sentiment, Thursday’s price action ended with a shooting star candlestick—a technical pattern often interpreted as a sign of potential trend reversal or short-term weakness.

Rally Mirrors Previous Decline, Raises Reversal Concerns

This latest leg up in crude oil prices closely resembles the sharp April sell-off. Back then, WTI dropped $17.25 from its swing high to the bottom. The current rally, which began on May 1 from a higher low (Point C), has gained $17.03, nearly mirroring that previous loss. When price action replicates historical swing patterns, technical resistance often follows.

The price also tested a rising parallel channel’s top boundary for the third straight day—further reinforcing the idea that WTI may be overextended in the short term.

Bearish Setup Confirmed if $74.02 Breaks

If prices fall below Thursday’s low of $74.02, it would confirm the shooting star formation and signal a potential short-term bearish reversal. In this case, traders will be watching several key support levels:

✅ $72.24 – Long-term AVWAP anchored from April 2024’s swing high
✅ $70.65 – 38.2% Fibonacci retracement of the recent rally
✅ $69.02 – 200-day Moving Average, a critical long-term support
✅ $68.64 – 50% Fibonacci retracement, likely a strong technical floor

A break below these levels could accelerate downside momentum in oil markets.

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📌 Market Takeaway:

While WTI crude oil has shown impressive strength in recent weeks, key resistance zones and reversal signals suggest traders should exercise caution. A confirmed break below $74.02 could open the door for a deeper retracement toward the 200-day moving average. Until a clean breakout above $77.85 is achieved, the bulls may remain vulnerable to a pullback.

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