SINGAPORE: US oil may test a resistance at $79.67 per barrel, a break above which could lead to a gain into $79.99-$80.49 range. The contract seems to be bouncing towards a resistance at $79.67, or the peak of a wave b at $80.49.

The bounce is classified as a reaction of the market to the preceding deep drop from the Jan. 27 high of $82.48, instead of a continuation of the uptrend from $70.08.

The downtrend may resume soon, towards $74.92, as pointed by a rising trendline. On the daily chart, oil managed to stabilise around a falling trendline and a support of $77.24.

US oil may bounce moderately before falling

The stabilisation is expected to be short-lived, as a wave C from $123.68 looks incomplete. It may have resumed towards its medium-term target of $62.89.

A break above $80.62 could signal the completion of a pullback towards the trendline. A bullish target zone of $83.48-$86.11 will be established accordingly.