Brent oil may test a support at $73.59 per barrel, a break below which could be followed by a drop to the Wednesday low of $71.67. The contract failed twice to break a support at $72.11.
Could these failures be the optimistic indicator of a double-bottom? The answer could more likely be “no” than “yes”.
It is generally very tempting to spot a bottom-like pattern in the sharp fall of the market. In most cases, such patterns are deceiving. An eager conclusion would most likely result in a confession. Market often moves against the expectation.
The reason could be that the expectation is quite often based on delusion, rather than the realistic perception of the momentum. Oil seems to be riding on a wave 3, which has extended twice below its 161.8% projection level of $73.59.
Brent oil may revisit Wednesday low of $71.67
It has a better chance of travelling into a range of $67.57 to $68.99.
The temporary stabilisation above $72.11 is thus considered as a possible accumulation of the bearish momentum for the subsequent drop.
A break above $75.01 may lead to a gain to $76.43-$77.31 range. On the daily chart, a confirmed flag suggests a target of $57.95, the 161.8% projection level of the wave (C).
A retracement analysis on the uptrend from $15.98 reveals a slightly higher target of $63.02.
These analyses confirm an extension of the downtrend. The sideways move around the support of $73.82 may not have much impact on the downtrend.
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