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Brent oil may test a support at $42.24 per barrel, a break below which could cause a fall to $41.59.
The contract is still consolidating within a wedge. Wave mode suggests that this wedge may turn out to be a bearish pattern, as a flat developing from the Sept. 8 low of $39.31 could have completed at the Oct. 20 high of $43.30.
Oil is riding on a wave C, which has just unfolded. It may travel to $38.83, its 61.8% projection level. Resistance is at $42.79, a break above which could lead to a gain to $43.30.
On the daily chart, as long as oil remains below $43.30, it is expected to fall towards $39.32, the 23.6% retracement of the uptrend from $15.98 to $46.53.
The gain on Thursday could be due to the support at $42.07, around which the sideways move may take a longer time to end.
Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own.
(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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