SINGAPORE: US oil may retest a support at $85.93 per barrel, a break below which could open the way towards $83.17-$84.55 range.
A five-wave cycle from the Sept. 8 low of $81.20 has completed.
It is expected to be further reversed, as the contract has only finished its first round of drop.
The second round, driven by a wave c, could extend into $83.17-$84.55 range.
A break above $87.63 may lead to a gain into a zone of $88.68-$89.57.
The five waves that make up the rise look impulsive. Such a pattern is against the bearish outlook, as it suggests the development of a zigzag, or a medium-term uptrend.
US oil may test support at $85.93
However, this weird pattern does accompany a bounce sometimes.
A study on the bigger picture of daily chart provides some clue to the inconsistent readings. Wave pattern suggests an incomplete wave (C) from $104.46, which may travel into $62.89-$71.76 range.
Another projection analysis on a different wave C marks a target of $73.93.
The bounce over the past few days seems to have lost momentum around a resistance at $89.20.
Strategically, a break below $85.59 may confirm the continuation of the downtrend.
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