SINGAPORE: Brent oil may test the resistance at $73.28 per barrel, with a good chance of breaking above this level and rising towards $75.61.
The strong recovery of the price from the Dec. 2 low at $65.72 signals a reversal of the downtrend. The bullish divergence on the hourly RSI suggests a further gain.
Thee waves make up the gain. So far, only two have unfolded. The wave c is travelling towards $75.61. An inverted head-and-shoulders is developing, which will be confirmed when oil breaks $73.28.
The pattern indicates a higher target of $80.83. Support is at $70.39, a break below which could cause a fall into a support zone of $67.10-$68.61.
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On the daily chart, oil is pulling back towards the upper channel. Key resistance to watch is $73.50, a break above which could confirm a continuation of the uptrend.
A failure to break the resistance would help maintain a medium-term target zone of $54.62-$59.08.
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