SINGAPORE: US oil looks neutral in a range of $87.11-$89.34 per barrel, and an escape could suggest a direction.
Even though it is clear that the downtrend from the July 29 high of $101.88 has resumed, oil’s exact behaviour on Tuesday remains unknown.
After the sharp fall on Monday, oil is supposed to consolidate above the support at $87.11.
How this consolidation is going to end would only be a rough guess.
But it is certain that once oil breaks $87.11, the downtrend would have continued towards $83.50-$85.73 range.
US oil targets $87.11-$89.34 range
A break above $89.34 will lead to a gain into $90.72-$91.84 range.
On the daily chart, oil briefly pierced below a support of $87.83.
It is poised to overcome this barrier and fall towards $79.09-$83.92 range, following its failure on Aug. 5.
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