These two supports are identified respectively as the 61.8 percent and the 76.4 percent Fibonacci projection levels of a downward wave c, the third wave of a presumed three-wave cycle from the Nov. 25 high of $46.50. This wave is capable of travelling to $40.75, the 100 percent level.
Strategically, the target at $42.30 will be confirmed when oil drops to $42.65, as it has to clear a higher support at $42.79, the 50 percent level. Resistance will be at $43.27, the 38.2 percent level, a break above which could lead to a gain to the 23.6 percent level at $43.86.
Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own.
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