WTI Crude Tests $81.59 Resistance After 20% Rally

Despite short-term signs of underlying strength, a pullback to test support near the downtrend line would also be normal behavior. Once support is found near that line, buyers may start to move in more aggressively. A couple of possible support levels can be observed along with the trendline: the recent higher swing low at $76.61 and the 200-day moving average near $75.39.

Since crude oil reclaimed that average recently after trading below it for a relatively brief period, an eventual test of support near the 200-day moving average would be healthy for the potential bullish recovery. The next upside target is near the 161.8% Fibonacci projection of the rising ABCD pattern at $85.20 and the falling 50-day moving average, currently near $86.01 but likely closer to the pattern target if reached later by price. A successful breakout above current resistance would keep the recovery intact. A pullback that holds support would further validate the improving trend structure.

Bruce has over 20 years of experience in financial markets and holds an MBA and CMT charter. He has worked as head of trading strategy at hedge funds and as a corporate advisor for trading firms.