SINGAPORE: US oil may retrace into a range of $69.82-$70.25 per barrel, as suggested by a rising channel. The rise from the June 12 low of $66.80 is presumed to be riding on a wave c, which may travel to its 161.8% projection level of $73.94 in its full capacity.

This wave makes a part of a bigger wave C, which was assumed to be the third wave of a consolidation from the May 3 low of $63.64.

The wave C is supposed to be roughly equal in both duration and size to the wave A, which ended at May 24 high of $74.73.

Based on this assumption, oil may resume its rally after the current shallow drop. On the daily chart, signals look a bit mixed as oil is bound within a range of $66.47-$75.64.

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An escape would suggest a direction. A bullish target of $83.05 will be established if the contract breaks $75.64, as an upward wave c will be then confirmed.

A break below $66.47 may signal the continuation of the downtrend towards $57.41.