SINGAPORE: Brent oil may bounce into a range of $70.47-$71.01 per barrel, as it failed to break a support at $69.54.
The support is identified as the 23.6 percent retracement of the uptrend from the December 26, 2018 low of $49.93 to the April 25 high of $75.60.
The basic reading of the chart pattern remains bearish, however, the consolidation triggered by the support at $69.54 could extend further.
Three waves make up the consolidation. The third wave labeled c is unfolding towards the target zone, which is formed by the 61.8 percent and the 50 percent projection levels of a downward wave (c).
The strength of the current wave c remains unknown. At its full capacity, it may travel to $71.85. It may also end far below this level. A break below $69.54 may signal the continuation of the downtrend towards $65.79.
On the daily chart, the uptrend from $49.93 could have reversed. The downtrend from $75.60 is regarded as a continuation of the preceding downtrend from $86.74.
Driven by a powerful wave (C), oil may fall into a range of $66.91-$68.33, formed by the 23.6 percent projection level of the wave (C) and the 50 percent retracement of the downtrend from $86.74 to $49.93.
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** 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. **