SINGAPORE: US oil may test a support at $90.02 per barrel, a break below which could open the way towards $88.36.

The contract faces a strong resistance at $92.72.

It is unlikely to overcome this barrier and rise more, simply due to the completion of a five-wave cycle.

The fifth wave labelled 5 may consist of three waves, instead of the common five waves.

Even though such a structure looks strange, it does appear occasionally.

A break above $92.72 may lead to a gain to $94.38.

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On the daily chart, the contract failed to break the upper trendline of an expanding wedge which establishes a resistance around $93, close to $92.72 (hourly chart).

Based on its historical performances around the trendline, oil is likely to drop deeply.

Whether the following drop is similarly deep as the preceding ones is still subject to further observation. A realistic target zone could be from $86.30 to $89.17.

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