Initial Target Reached
An initial key upside target zone from $68.79 to $68.98 has been defined on the chart for a couple weeks, consisting of a 78.6% Fibonacci retracement level and initial target for a rising ABCD pattern, respectively. The 200-Day MA, now at $68.92, was also a part of the potential target zone. It had represented a higher price point until converging with the ABCD target earlier this week.
Bull Flag and Double Bottom Point Higher
Last Friday, crude oil triggered an upside-breakout of a bull flag pattern, and then on Monday a double bottom bullish reversal pattern triggered. Each breakout was confirmed by a daily close above the breakout level. Subsequently, a trendline break confirmed strength yesterday with a daily close above a downtrend line connecting the early-April swing high. Each pattern shows the potential for higher targets to eventually be reached.
The smaller bull flag pattern measures to a potential upside target of around $72.52, while the larger double bottom points to the potential for $75.40. Although this does indicate the potential for higher prices, eventually, targets are the least reliable component of technical analysis and that needs to be considered.
Trend Channel Supportive of Higher Prices
Otherwise, higher targets for crude oil include the 127.2% projection for a rising ABCD (slightly different measure than the flag) at $71.39 and a lower swing high at $72.49. Notice that the swing high aligns with the bull flag target zone. There is also a downtrend line near those price levels. If it is eventually approached, the line should be considered along with the other price levels.
Although, the price levels have priority. Since the downtrend found support near a bottom parallel channel line in April, there is the potential for price to eventually approach the other side of the pattern, which would be the top solid downtrend line on the chart. This pattern is also supportive of higher prices before the rally from recent lows may be complete.
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