SINGAPORE: US oil may hover above a support at $72.04 per barrel, or bounce into a range of $73.26-$74.17, as it has stabilised around a support of $72.04.
The support is identified as the 200% projection level of a downtrend from $90.10.
This projection level seldom works as a strong support. However, when accompanied by the bullish divergence on the hourly RSI, it may become very effective.
In addition, a small five-wave cycle from $82.72 seems to have completed, increasing the chance of a bounce as well.
US oil may drop more into $70.72-$72.04 range
A break below $72.04 may trigger a shallow drop to $70.72.
On the daily chart, oil found a support at $71.76, which works together with the one at $72.04 on the hourly chart to temporarily stop the fall.
The downtrend looks steady and will resume upon the completion of the anticipated bounce.
It may eventually extend to $62.89.
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