Crude oil extended its bearish correction on Tuesday to a new trend low of $66.96. Subsequently, buyers took control and drove the price up to new highs for the day. At the time of this writing, crude oil hit a high of $68.66 for the day as it tested resistance around a trendline that marked the bottom of a prior consolidation phase.
Notice that the market recognized the line on the way down as support was seen at the line last Wednesday and it was followed by a bounce. Crude oil continues to trade near the high prices of the day and may complete a bullish dragonfly doji or hammer candlestick pattern if it remains in a similar position at the close of the session.
Breakout Above Tuesday’s High
A decisive breakout above today’s high would trigger a one-day bullish reversal breakout and put crude in a position to challenge higher trend resistance areas. The potentially more significant resistance zone is first around the 20-Day MA, now at $71.11.
For crude to have a shot of going higher and potentially reversing the bearish trend it needs to first get above and stay above the 20-Day line. That moving average can be viewed along with the downtrend line marking dynamic resistance for the decline. A decisive breakout above the line would put crude in a position to challenge potential resistance around the 50-Day MA, which is $73.23 currently.
