SINGAPORE: US oil may test a support of $78.80 per barrel, with a good chance of breaking below this level and falling into $77.78-$78.41 range.
Strong as it is, the rise from the March 3 low of $75.83 looks like the final part of a short uptrend from $73.80.
The rise was driven by a wave e, the last wave of a small five-wave cycle. Both the wave a and the wave c adopted a zigzagging mode.
The wave e can’t be so different from its two predecessors.
The only explanation could be that it is the final thrust of the bullish momentum.
A break above $79.82 could lead to a gain into $80.45-$81.07 range.
On the daily chart, the rise so far has been categorized as a part of the consolidation within the range of $71.76 to $80.62.
The downtrend from $123.68, which is riding on a wave (C), looks steady.
This bearish outlook has to be reviewed once oil breaks $80.62, as such a break could confirm a triple-bottom that formed around $71.76, which suggests a bullish target of $94.98.