SINGAPORE: US oil may retest a support of $79.68 per barrel, a break below which could open the way towards $77.84. The deep fall on Tuesday strongly suggests a reversal of the uptrend from $70.08. The drop followed a preceding sharp correction from the Dec. 23, 2022 high of $82.64.
These frequent deep drops signal an exhaustion of the wave C from $72.46.
Despite the fact that this wave failed to fulfil its target of $83.88, it may have completed at $82.64, as suggested by its five-wave structure.
The consolidation in the range of $79.68-$81.18 is expected to be short-lived, to be followed by another round of deep slide. A break above $81.18 could lead to a gain into $81.76-$82.33 range.
On the daily chart, the short uptrend from the Dec. 9, 2022 low of $70.08 seems to be slowly reversing, after the formation of a morning star between Jan. 20 and Jan. 24.
The trend is classified as a part of a big wave (C) from $123.68, which is expected to extend into a range of $62.89-$67.33.