SINGAPORE: US oil may retest a support at $74.17 per barrel, as a downtrend from the Nov. 7 high of $93.74 looks incomplete.
The trend may extend into a wide range of $66.45-$70.72, as suggested by a projection analysis, a falling trendline and a double-top.
The bounce triggered by the support at $74.17 was stronger than expected.
However, it is regarded as a technical reaction of the over-sold market to the sharp drop from $82.36.
Only a further gain above $78.94 could suggest a reversal of the downtrend.
Immediate resistance is at $77.62, a break above which could open the way towards $78.94.
US oil may fall into $70.72-$72.04 range
On the daily chart, a hammer formed on Monday. Whether it is going to work as a bullish reversal pattern will largely depend on the candlestick on Tuesday.
A white candlestick could confirm this pattern, while a black one will make it invalid. Given that oil has just broken the support at $77.24, the hammer could be due to a pullback towards this level.
A projection analysis on both the trend from $123.68 and the trend from $93.74 suggests a further drop towards $62.89-$64.43 range.
Signals will temporarily turn bullish if oil could stand firm above $77.24 on Tuesday.
A bullish target zone of $80.62-$83.48 will be established accordingly.
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