SINGAPORE: US oil may bounce to $77.37 per barrel, as it seems to be stabilizing around a support of $76.53. The stabilization, along with the slowed drop on Wednesday, signals an exhaustion of the downtrend from $80.94.
A bounce could be due. It is hard to figure out how far this bounce could go before it exhibits its strength.
Most likely, it could extend into the resistance zone of $77.37-$78.21.
A fall below $76.11 could confirm the continuation of the downtrend towards the $74.77-$75.49 range. On the daily chart, the spinning top on Wednesday seems to be an obvious contrast with the preceding big black candlestick.
A moderate consolidation may occur around $77.24. Until oil escapes from a rising channel, trending signals will remain a bit mixed.
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A key level to watch would be $73.83, the Feb. 23 low, a fall below which could confirm an escape and a target of $62.89.
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