SINGAPORE: US oil may retest a resistance at $67.49 per barrel, a break above which could open the way towards $68.94-$69.84 range. The strong recovery of the market from the Monday low of $64.12 not only violated an expanding wedge, but also suggested the formation of a temporary bottom.

There have been frequent bounces seen in the support zone of $65.13-$65.97.

The brief piercing below the support of $65.13 only ended up with a stronger-than-expected bounce. These adverse moves against the downtrend signal an exhaustion of the trend. The bullish divergence on the hourly RSI confirms this weakness.

The focus is now on how far the bounce could go. The upper trendline of the wedge suggests a target of $69.84. Strategically, it is safer to target $68.94 first. Support is at $65.97, a break below which could open the way towards $64.23-$65.13 range.

US oil may retest support of $65.13

On the daily chart, a bearish flag points at a target around $57.

A projection analysis on the wave C from $123.68 marks a nearer target of $62.89. However, these targets may not be fulfilled until oil experiences some bounces.

The long-shadowed hammer on Monday could be the very sign of the first bounce.