SINGAPORE: US oil may retest a support of $65.97 per barrel, a break below which may open the way towards $62.77-$64.23 range. The contract is riding on a wave c from $77.47, which has extended twice below its 161.8% projection level of $67.49. Chances are that this wave could travel into a range of $61.32 to $62.77.
The wave c failed twice to overcome the barrier at $65.97.
Are these failures a good indicator of a bullish double-bottom, which further indicates the completion of the wave c? Strategically, it is better to hold the bearish outlook than to work out a target based on the assumed double-bottom. Most often, such a pattern may turn out to be deceiving in the sharp fall of the market.
It is common for market to move sideways for a while after a deep drop.
The sideways move generally ends up by being shaped into a continuation pattern, instead of a bottom pattern. That said, a bullish target range of $69.84-$70.87 will come into place once oil breaks above $68.94.
A break below $67.49 may cause a drop into $65.13-$65.97 range.
US oil may retest support of $65.97
On the daily chart, a confirmed bearish flag suggests a target around $57.
A projection analysis on the wave C from $123.68 marks a nearer target of $62.89. The stabilisation around the support of $67.33 is expected to have little impact on these bearish targets.
A close below $67.33 would be considered as a convincing signal of the downtrend continuation.
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