SINGAPORE: US oil may drop into a range of $85.67 to $86.38 per barrel, as a bounce from $82.63 has completed.

The bounce was driven by a wave C, which consists of three waves.

After oil failed to bounce over a resistance at $88.70, the wave C is unlikely to extend towards $89.59 again.

The downtrend from the Oct. 10 high of $93.64 may have resumed.

It is supposed to develop towards $82.63.

A break above $88.70 will confirm an extension of the bounce towards $89.59-$91.02 range.

On the daily chart, oil failed to break a falling trendline.

The failure put bulls in a awkward situation.

To drive the price towards $94.37 seems unrealistic. It could be much easier for them to retreat first.

US oil may retrace into $86.38-$87.27 range

Whether the contract could resume its rise after the retracement will be a future concern.

The immediate focus on how deep the retracement could be.

A deep drop to $83.17 will confirm a continuation of the downtrend from $123.68, while a much shallow one could bring some hope for retesting the trendline.