SINGAPORE: US oil may bounce moderately to $99.15 per barrel before dropping again, following its stabilization around a support of $95.87.
The drop from $104.46 is so deep that it suggests a completion of the bounce from $90.56 and a resumption of the downtrend from $114.05.
A break above $99.15, however, will not only lead to a gain into $101.18-$102.43 range, but also signal the development of an inverted head-and-shoulders.
The pattern suggests a rise far above $104.46.
A break below $95.87 may trigger a drop into $90.56-$93.84 range.
On the daily chart, the downtrend remains steady within a falling channel.
US oil to drop into $93.99-$96.10 range
The longer oil hovers above $94.98, the more likely an inverted head-and-shoulders would be confirmed.
Special attention should be paid to a break above the resistance at $100.46, as the break will not only confirm an escape from the channel, but also make the inverted head-and-shoulder valid.
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