SINGAPORE: Brent oil may keep dropping into a range of $71.88-$72.69 per barrel, following a completion of the bounce from the Dec. 2 low of $65.72.
The bounce adopted a zigzag mode, consisting of three waves, with the wave c and the wave a being roughly equal. The deep fall on Thursday confirms the completion of the bounce.
An inverted head-and-shoulders indicates a target of $80.40, which looks far away and unrealistic. It has to be temporarily aborted.
Resistance is at $74.51, a break above which could lead to a gain to $75.20-$76.14 range. Only a further gain above the Thursday high of $76.70 could confirm the continuation of the uptrend.
On the daily chart, oil looks heavy around $73.50, a pivotal level in evaluating the following direction. Chances are it may drop below this level.
The drop will essentially signal a return of the price into the lower channel, which indicates a very bearish target zone of $54.62-$59.08.
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