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Brent oil may retrace into a range of $69.81-$70.47 per barrel, as it failed to break a resistance at $71.84.
The resistance is identified as the 14.6 percent retracement of the uptrend from the December 26, 2018 low of $49.93 to the April 25 high of $75.60.
The fall from $75.60 looks like a typical zigzag, which consists of three waves. The first wave and the third wave are equal.
The fall is regarded as the first part of a medium-term downtrend. The current bounce is the second part. However, it is not very clear how strong the bounce will be.
The bounce could have developed too fast. It is expected to be reversed further. A break above $71.85 could signal the extension of the bounce towards $73.27, the peak of the wave b.
On the daily chart, the current fall is regarded as a continuation of the preceding downtrend from $86.74. Driven by a powerful wave (C), the fall may extend into a range of $52.85-$61.54, formed by the 61.8 percent and the 38.2 percent projection levels of the wave (C).
This bearish outlook will be reviewed once oil breaks above $72.68, a 61.8 percent retracement of the downtrend from $86.74 to $49.93.
(No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.)
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