SINGAPORE: US oil may test a support at $59.08 per barrel, a break below which could open the way towards $57.63.

A five-wave cycle from $51.44 has completed. A retracement analysis on the cycle reveals a target zone of $57.63-$59.08, formed by the 50% and the 38.2% levels.

The wave 4 ended around $57.63 which works as a target, based on wave theory. Another retracement analysis on the shorter uptrend from $58.59 marks fine-tuned supports and resistances.

The 86.4% level of $59.30 temporarily holds. The bounce triggered by this support may end around $59.82. An extension of the bounce may be limited to $60.58.

On the daily chart, oil is testing a support at $59.41, the 14.6% retracement of the uptrend from $33.64. This support will be broken, as oil could eventually drop into $48.73-$52.29 range.

However, it is not very clear if the contract bounces towards $61.70 first, before breaking $59.41. Signals on the hourly chart suggests a small chance of the bounce.

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