SINGAPORE: US oil may break a support at $70.29 per barrel in the next quarter and fall towards $56.07-$62.43 range.
A negative $40.32 was touched in April 2020, which is not regarded as an orthodox starting point of the uptrend, as it was much distorted.
Instead, the April 28, 2020 low of $10.07 is chosen to be the orthodox starting point, as it is near $9.76, the 161.8% projection level of a preceding wave c from $65.65.
A retracement analysis on the uptrend reveals a support at $70.29, which temporarily stopped the fall and triggered a moderate bounce.
The bounce would have little impact on the downtrend, which is supposed to extend into $56.07-$62.43 range, as suggested by a double-top around $125.
Strategically, the target zone will be confirmed when oil breaks $70.29.
The bounce is still likely to extend, as long as oil remains above this level.
On the daily chart, a break above $77.77 could confirm the extension of the bounce towards $82.55-$86.82 range.
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A projection analysis on the downwards wave (C) from $123.68 suggests a target of $62.89, its 161.8% projection level, as a wave C seldom ends around its 138.2% projection level.
This wave consists of three smaller waves.
The third wave labelled C is unfolding towards $64.43, which is near $62.89.
However, this wave C is capable of travelling to a much lower target of $46.31.
Given that the wave A adopted a double-zigzag mode, the wave C could be very sharp, quickly fulfilling its target of $64.43.
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