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Brent oil may reverse its downtrend in a range of $69.69-$70.58 per barrel, as suggested by a projection analysis and the hourly RSI.
The range is formed by 161.8 per cent and the 150 per cent projection levels of a downtrend from $81.84. Wave pattern on a bigger downtrend from $86.74 suggests a completion of a five-wave cycle by end of this week.
The current wave labelled (e) is expected to end around $69.69, as pointed by a falling trendline. The bullish divergence on the hourly RSI confirms an exhaustion of the downtrend. Technically, oil is becoming stronger and stronger. It is poised for a decent bounce.
Indeed, the short-lived bounce on Wednesday signals that bulls could be testing the water before launching well-prepared attacks.
On the daily chart, oil is trying to stabilise around a support zone of $70.55-$71.37, formed by the 38.2 per cent retracement of the uptrend from $44.35 to $86.74, and the 86.4 per cent projection level of an upward wave (C).
This zone will work together with the target zone on hourly chart to stop the fall and cause a bullish reversal.
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