Crude Oil's 39% Rally Tests $94 Resistance; Breakout Targets $100

WTI crude oil rose to $94.34 on Thursday, testing a resistance zone that combines the 61.8% Fibonacci retracement of the prior decline at $93.69 and a lower swing high at $94.98. The rally from the July low of $67.73 represents a 39% gain. The reaction to this area will determine whether the uptrend continues or a pullback unfolds, according to Bruce, a technical analyst and CMT charter holder.

A sustained move above the resistance zone would signal that buyers remain in control, Bruce said. The next target above the zone is a downtrend line near $96.69. A move above that opens the path to a lower swing high at $99.29 and the 78.6% Fibonacci retracement at $100.75, he added.

If a pullback occurs from the $94.34 high, support is first at $88.16, the session's higher daily low, followed by the 50-day moving average near $84.60, Bruce said. The 50-day average marked dynamic support for the prior advance. A confirmed reclaim of that average suggests further strength. A drop below it signals a weakening trend, he noted.

The recent bearish correction completed at the July low of $67.73, Bruce said. He noted that similar high-volatility moves occurred after a multi-year breakout in early March, which led to a spike to $199.54. That level of advance was unsustainable, resulting in a correction to the July higher swing low, according to Bruce. The current advance has brought the market back to a key resistance zone.

The reaction to the $93.69-$94.98 area will determine whether the uptrend persists or a pullback takes hold, Bruce said.