SINGAPORE: US oil may test a support of $71.05 per barrel, a break below which could open the way towards $69.31-$69.98 range. The sharp drop from Monday’s high of $75.06 concluded the rise from $67.03. Three waves make up the current fall.

The wave c is unfolding towards $71.05.

This wave is capable of travelling into a much lower range of $69.31-$69.98, considering that the trend from $67.03 has reversed.

Resistance is fixed at $72.12, a break above which could lead to a gain into $72.46-$72.79 range.

On the daily chart, oil failed to break a resistance at $75.62.

Chances are it may retrace to $70.02 first.

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The following drop looks like a part of a consolidation within a rising wedge. It is still a bit early to decide the nature of the pattern.

Signals will become clearer when oil breaks either the lower trendline or the upper trendline of the wedge.

The bias could be towards the downside, as the whole bounce from $63.64 may have ended.