SINGAPORE: U.S. oil may retest a support at $77.16 per barrel, a break below which could open the way towards $75.14-$76.26 range.
The deep drop on Thursday suggests a completion of a wave c, the third wave of a bounce from the Dec. 9 low of $70.08. The wave b ended at $73.33 which works as a target in next week.
The wave c narrowly missed its target of $81. It is unlikely to extend towards this level, based on the depth of the correction on Thursday.
Resistance is at $79.19, a break above which could lead to a gain into $79.96-$81 range.
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On the daily chart, a black candlestick with a long upper shadow formed on Thursday, after oil failed to reach a resistance at $80.62.
This candle pattern indicates a further slide on Friday. The bounce is being shaped into a rising wedge, which looks like a bearish continuation pattern. It is contracting to a point and may complete next week.
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