Crude oil breaks long-term falling wedge, signaling bullish shift.
Iran conflict adds supply disruption risk, fueling rally.
Double bottom breakout confirms trend reversal above $78.44.
Weekly close near highs shows strong buyer control.
$93.15, $95.50, and $102–$114 show key upside targets.
Geopolitical Shock Sparks Major Technical Breakout
WTI spot crude oil broke out of a long-term falling bull wedge this week as the Iran war sharply increased supply-disruption risk across the Middle East, triggering a powerful rally in energy markets. The breakout comes as traders rapidly price in the risk of supply disruptions across the Middle East, particularly around the Strait of Hormuz, one of the world’s most critical oil transit routes. The surge in risk sentiment has fueled a sharp rally in crude prices, pushing crude oil to its highest levels in a couple of years and triggering a technical breakout that indicates a trend change from bearish to bullish.
Crude Oil Weekly Chart
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Weekly Breakout Signal Structural Strength
The breakout occurred on a gap-up open above the downtrend line at the start of the week. On the weekly chart, the 100-week moving average marked a similar trend resistance zone as the trendline and provided further confirmation of strength. Support for the week held essentially at that average, providing a potential launch pad for the advance. That move followed several years during which the 100-week moving average represented dynamic trend resistance. Since November 2022, crude oil has largely traded below that moving average until this week. An additional sign of strength occurred when the 200-week moving average was reclaimed on a move above $76.15. Since July 2024, the 200-week moving average had represented trend resistance.
Crude Oil Daily Chart
Double Bottom Breakout Reinforces Bullish Reversal
An upside breakout of a large double bottom pattern triggered above the neckline at $78.44. This breakout provided another piece of evidence that buyers were taking control and triggered a bullish trend reversal signal. The double bottom formation also establishes initial potential upside targets, as discussed below.
Following the trend breakout, strength was confirmed each time a lower swing high from the downtrend was recovered, providing additional bullish trend reversal signals. Each level also marks potential support during a retracement of this week’s rally. However, given the trend structure, the more significant recovery was above the recent lower swing high of $78.44. The next more significant swing high at $95.50, from September 2023, represents the next key pivot level, as a rally above it would further confirm a long-term trend reversal.
Key Resistance Levels Come Into Focus
The high for the week at $92.64 was close to completing a 50% retracement of the downtrend that followed the March 2022 peak of $131.31. The 50% retracement level is at $93.15. This level can be observed for signs of resistance or a breakout, along with the lower swing high of $95.50. A decisive recovery of that swing high would provide another strong confirmation of a long-term trend reversal.
At the weekly high of $92.64, crude oil was up $37.64 (68.4%) from the most recent swing low at $55.00. That measured move surpassed the largest rally seen in the downtrend that followed the 2022 peak of $131.31, further confirming the strength of this week’s advance. Crude oil ended the week at $91.50, completing a $24.10 (35.8%) advance for the week. It closed in a bullish position in the upper quarter of the week’s range, suggesting that buyers may remain in charge heading into next week.
Upside Targets Point Toward Triple-Digit Oil
If an advance can be sustained above the 2023 high, the next key upside target is the confluence of two indicators around $102.16. Both the 61.8% Fibonacci retracement and initial target from the double bottom pattern, which is calculated from the height of the pattern, point that price zone. When calculating based on a percentage move in price the double bottom pattern points potential resistance around $111. 85.
The higher projected target on the chart comes from is from the confluence of the 78.6% Fibonacci retracement and a measured-move completion. That level is where the current upswing matches the gains from the rally from the November 2021 low, indicating a potential upper target near $114.98.
Disclaimer: Results are not typical and will vary from person to person. Making money trading stocks takes time, timing, proper execution, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. Some students featured have since joined our team as educators or mentors after achieving success with our programs.
