SINGAPORE: U.S. oil may fall to $52.53 per barrel, as suggested by a projection analysis and the hourly MACD.
The contract failed to break a resistance at $55.40, the 238.2 percent projection level of an uptrend from $44.35. This trend is a part of a five-wave cycle from the Dec. 24, 2018 low of $42.36.
The sharp fall from the Jan. 31 high of $55.37 strongly suggests the completion of the fifth wave labelled (5). Further confirmation is given by the bearish divergence on the hourly MACD, which indicates a slim chance of the wave (5) to extend.
On the daily chart, a retracement analysis on the downtrend from $76.90 to $42.36 reveals that oil became exhausted after approaching a strong resistance at $55.55, the 38.2 percent level. Most likely, it will fall towards $50.51.
A bounce may be limited to $54.73 (first chart).
* The analysis is based on delayed data, prediction may be affected. Charts are not available in reports received in email box through "Alert". To get charts, use the news code of TECH/C to retrieve the original reports.
** Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own.
No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.
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