SINGAPORE: US oil may retest a support at $79.04 per barrel, a break below could trigger a drop into the $77.25-$78.14 range.
The current consolidation is shaped into a rising wedge, which looks more like a top pattern than a continuation pattern, as oil keeps testing the lower trendline.
The repeated attempts to break the trendline could be mostly due to a resistance zone of $80.62 to $80.94.
Oil has to retrace more to accumulate the bullish momentum needed for retesting the zone.
A break above $80.94, which seems unlikely, may lead to a gain into $81.92-$83.02 range. On the daily chart, two spinning tops and one small hanging man formed between Monday and Wednesday, around a resistance at $80.62.
US oil may retest resistance at $81.92
This bearish combination confirms an exhaustion of the rally. Oil is likely to cover a common gap forming between March 31 and April 3.
The subsequent drop is expected to somewhat mirror the sideways move between Feb. 6 and March 13, in a range of $71.76 to $80.62.
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