SINGAPORE: US oil may test a support at $79.04 per barrel, a break below could open the way towards $77.25-$78.14 range. The contract failed to break a strong resistance at $81.92, which is strengthened by a resistance zone of $80.92 to $80.94.
The current correction is a natural reaction of the market to the sudden surge on Monday.
The surge confirmed a powerful wave (3), which is expected to travel to $84.80.
Based on this calculation, the current correction could be shallow, probably limited to the support zone of $77.25 to $78.14.
Oil stable ahead of key US inflation data, set for monthly drop
A study on the daily chart reveals a similar correction target of $77.24, following the failure of the contract to break resistance at $80.62.
The rise from the March 20 low of $64.12 looks so strong that it is interpreted as the early sign of a downtrend from $123.68 having reversed.
An uptrend as strong as the one from the April 11 low of $92.93 could be developing.
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