Failed Weekly Breakout
The initial rally on Wednesday hit resistance around the 50-Day MA, before sellers took charge. It also triggered a breakout above the three-week high of $65.06. An advance above that high, followed by it being confirmed with a daily close above it, will set the stage for higher prices. In other words, downward pressure remains unless crude can close above the three-week high. Since the 50-Day MA is currently lower than that, it would have also been reclaimed by then, providing further bullish evidence.
Rejection of Price at 50-Day Line
Nonetheless, the clear downside rejection from the 50-Day MA could lead to a deeper pullback before another breakout attempt is made. Notice the reaction during the previous rally that tested the 50-Day MA in early-April. Buyers were able to push the price above the line for a couple days before a bearish reversal took hold. During the current approach, sellers took charge relatively earlier than the prior test of the 50-Day line. This is a bearish sign that has been dampened so far by the 20-Day MA support.
Deeper Pullback Targets $59.91
Therefore, a deeper pullback towards the 50% retracement at $59.91 or the 61.8% Fibonacci retracement level at $58.95 may occur before crude oil is ready for a more serious bullish breakout attempt. This is not surprising and consistent with the development of a bottom.
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