Brent oil may bounce more to $75.89 per barrel, following its strong recovery from Monday’s low of $70.12. The recovery suggests the formation of a temporary bottom around $70.41.

The bullish divergence on the hourly RSI confirms an oversold market, which is due for a decent bounce. How far this bounce could go is a tricky question.

Given that oil has climbed into an expanding wedge, perhaps it would rise towards the upper trendline of the pattern, around $75.89.

Support is at $72.71, a break below which may trigger a drop into $70.41-$71.29. Such a drop could be deep enough to confirm the continuation of the downtrend.

On the daily chart, a flag suggests a target of $57.95, the 161.8% projection level of the wave (C). A retracement analysis on the uptrend from $15.98 reveals a similar target of $63.02.

Brent oil may retest support at $71.29

Even though this medium-term target zone remains intact, the long-shadowed hammer on Monday represents an exhaustion of the fall. Market may experience some disturbing bounces before dropping towards this zone.