Resistance Test Turns into Reversal
The rejection from the 20-Day line is potentially significant. It marks the second test of that average since it failed as support last Thursday, a day that confirmed the breakdown from a bear flag formation. Tuesday’s move may represent a completed pullback to test former support as resistance, setting the stage for a continuation lower. A decline below Monday’s low of $62.20 would trigger an inside day, with further weakness confirmed on a break under last Friday’s low at $61.84.
Bearish Pattern Structure Remains Intact
Crude oil continues to trend lower in a series of declining swing highs and lows, forming the structure of a falling bullish wedge. However, last week’s drop to a new low below $62.19 confirmed a bearish continuation signal, increasing the odds of another leg lower. Price action suggests that the wedge formation is still evolving, and the next downside target is around $60.65. That level lines up with both the 78.6% Fibonacci retracement and a prior support shelf from May. Importantly, the wedge pattern allows for a move into that zone while maintaining its technical structure.
Weekly Trend Signals Remain Weak
On the weekly timeframe, crude continues to face resistance at the 20-Week moving average as well, now at $65.19. That level has held firm for four consecutive weeks, reinforcing its importance. Unless crude oil can decisively close above the 20-Week average, the likelihood of reaching the lower $60.65 target zone remains high.
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