SINGAPORE: US oil may retest a resistance at $85.70 per barrel, a break above which could open the way towards $86.76.

The contract is stabilising around a key support of $84.63.

Generally, the 61.8% retracement is strong enough to trigger a decent bounce or at least a consolidation.

It must be noted that the drop on Thursday confirmed a continuation of the downtrend from $97.66.

As a result, bulls are advised not to put high expectations on the following bounce, which may turn out to be brief and weak.

The bounce may be limited to $86.76.

A further surge will suggest an extension of the uptrend from $81.20 towards $88.07-$90.19 range.

US oil may retest resistance at $90.07

On the daily chart, oil failed to break a resistance of $89.20.

The big black candlestick clearly signals a continuation of the downtrend from $104.46.

The trend is riding on a wave C, which is expected to travel to $73.93.

Another projection analysis on the trend from $123.68 indicates a much lower target of $62.89.