SINGAPORE: Brent oil may test a support at $42.30 per barrel, a break below which could cause a loss to the next support at $41.71.
These two supports are identified respectively as the 61.8 percent and the 76.4 percent Fibonacci projection levels of a downward wave c, the third wave of a presumed three-wave cycle from the Nov. 25 high of $46.50. This wave is capable of travelling to $40.75, the 100 percent level.
Strategically, the target at $42.30 will be confirmed when oil drops to $42.65, as it has to clear a higher support at $42.79, the 50 percent level. Resistance will be at $43.27, the 38.2 percent level, a break above which could lead to a gain to the 23.6 percent level at $43.86.
Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own.
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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