SINGAPORE: U.S. oil may break a support at $58.59 and fall to the next support at $57.81 per barrel, as it failed to break a resistance at $59.55.
The resistance is identified as the 76.4 percent projection level of an upward wave c from $54.52. The failure to overcome this barrier, along with the bearish divergence on the hourly MACD, suggests a completion of the wave c. A break above $59.55 could lead to a gain to $61.10.
On the daily chart, a retracement analysis on the downtrend from $76.90 to $42.36 reveals a similar resistance at $59.63, the 50 percent level, which works together with the resistance at $59.55 to stop the uptrend.
The current uptrend is shaped into a rising wedge, the two trendlines of which are converging to a point. Given that oil is unlikely to break $59.63, the wedge has a strong bearish indication that a deep correction is due.
* The analysis is based on delayed data, prediction may be affected. Charts are not available in reports received in email box through "Alert". To get charts, use the news code of TECH/C to retrieve the original reports.
** Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own.
No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses. **
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