SINGAPORE: Brent oil is biased to drop to $105.88 per barrel, as indicated by two head-and-shoulders patterns and a Fibonacci retracement analysis.
Oil has pierced deep below a support at $107.35, the 23.6 percent Fibonacci retracement on the rise from the June 24 low of $99.67 to the recent high of $109.72.
Even though it is hovering around the support within a neutral range of $106.25-107.85, oil is expected to eventually drop to the next support at $105.88, the 38.2 percent retracement.
The reason behind such a bearish view is that two head-and-shoulders patterns have been confirmed, both pointing to a target lower than $104.70, the 50 percent retracement.
A rise above $108 will signal oil has completed the first leg of the current downtrend, and a further rebound towards$109.20 could be likely.
No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.
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