Markets

Brent oil targets $87.46-$93.29 range in 3 months

Published September 24, 2012 Updated September 24, 2012 06:55am

The rally has been triggered by a support at $93.18, the 38.2 percent Fibonacci retracement on a long-term uptrend from $36.20 to $128.40, it is a reaction to the previous sharp fall from $128.40 and also a pullback towards a trendline ascending from $36.20.

Neither the reaction nor the pullback indicates the rally has resumed the preceding uptrend that developed from $36.20, indeed, they suggest the correction from $128.40 is incomplete.

This correction has only briefly pierced below $93.18. In terms of depth, it is not over as it's expected to reach into a range of $71.42 - $82.30, respectively the 61.8 percent and the 50 percent retracements.

In terms of duration, it is hardly acceptable for the correction to last only 81 trading sessions from March 1 to June 22, as it is too short, compared to the 821 trading sessions of 'a preceding uptrend from Dec. 24, 2008 to March 1.

The fall from $128.40 to $88.49 has adopted an impulsive wave mode, while the rise from $88.49 to $117.95 has been structured in five corrective waves.

These wave patterns indicate a bigger corrective wave cycle is still expanding, with a downward wave C unfolding towards its target zone of $87.46-$93.29, formed by the 61.8 percent and the 76.4 percent Fibonacci projection levels.

Resistance is at $117.95, a break above which will confirm an extension of the preceding uptrend towards $128.40.

Copyright Reuters, 2012