SINGAPORE: US oil may bounce moderately into a range of $78.94-$79.75 per barrel, before retesting a support at $76.55. The drop on Monday looks too sharp to sustain.
It is expected to be partially reversed by the current bounce.
Nevertheless, the drop is deep enough to confirm a completion of the bounce from the Nov. 28 low of $73.60.
Even though the possibility of the bounce to extend can’t be completely wiped out until oil falls below $73.60, it could be much safer to assume the downtrend from $90.10 has resumed.
The trend observes a set of projection levels.
US oil may retest resistance at $83.20
Immediate support is at $76.55, a break below which could open the way towards $74.17-$75.49.
A break above $79.75, however, would signal the extension of the bounce towards $83.20.
On the daily chart, oil is retesting a support at $77.24.
Its persistence simply convinces the market of a steady downtrend.
A wave (C) is driving the trend towards $62.89-$71.76 range.
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