SINGAPORE: US oil may bounce into a range of $78.36-$78.377 per barrel before retesting a support of $77.84. The uptrend from $70.78 has reversed. A retracement analysis on the trend reveals a support of $77.84, which is expected to be stronger than the one at $79.67.
However, the bounce triggered by $77.84 so far has been much weaker than the wave 5 caused by $79.67.
Such a relation suggests an extension of the bounce towards $78.36-$78.77 range, even though oil has briefly risen above $79.67.
A fall below $77.66 could confirm the continuation of the downtrend towards $76.35. On the daily chart, the consecutive drops over the past two days indicate a continuation of the downtrend from $123.68.
US oil may revisit Jan. 27 low of $79.04
Strategically, this bearish outlook will be proved, once oil breaks the nearest support of $77.24.
Before the break occurs, the drop could still be regarded as a pullback towards a falling trendline.
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