SINGAPORE: U.S. oil may retrace to $60.88 per barrel, as it failed to break a resistance at $63.06.
The resistance is identified as the 14.6 percent retracement of the uptrend from $42.36 to $66.60. The bounce on Monday is classified as a pullback towards a rising trendline. The first round of the drop from $66.60 is over.
The depth of the drop signals a reversal of the uptrend from $42.36. This drop may eventually extend below the Monday low of $60.04.
It is not very clear how strong the current bounce will be. At its full capacity, it may reach $64.75. However, this target will only be confirmed when oil breaks $63.06. The bounce could have developed too fast to sustain, it is expected to be reversed first.
On the daily chart, oil could be riding on a wave C, the third wave of a big three-wave cycle from the October 3, 2018 high of $76.90. A projection analysis suggests a target at $58.45, the 23.6 percent level, which will be confirmed when oil breaks the support at $61.56 again.
* 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 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. **