Brent oil is expected to retest a support at $80.88 per barrel, a break below which could open the way towards $78.30-$80.01 range.
The bounce triggered by the support was much stronger than expected.
However, the contract is riding on a powerful wave 3, which may travel to $76.45, as pointed by a falling trendline.
The high volatility on Monday was apparently due to the unrest in China, which may remain in focus for some time.
How the market is going to perform may largely depend upon the latest development in the country. Under such unusual circumstances, it could be difficult to predict the exact move of the price.
Brent oil to fall sharply into $76.45-$78.30 range
However, the downtrend could remain firm, until it extends to the range of $76.45-$77.18.
Immediate resistance is at $83.17, a break above which could lead to a gain into $83.88-$85.46 range.
Once oil climbs into this range, the downtrend from the Nov. 7 high of $99.56 is likely to reverse.
On the daily chart, oil broke a support at $83.63.
The break is deemed valid, even though oil closed near this level on Monday.
The break opened the way towards $57.95-$67.75 range.
A realistic target will be $77.56, around which a decent bounce may occur.
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