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US oil may retest a support at $51.31, with a good chance of breaking below this level and falling more to $50.76.
The support is identified as the 150 percent projection level of an upward wave C from $44.35. This wave consists of three small waves, with the third wave labelled c comprising five smaller waves. Such a structure indicates a completion of the wave C.
The drop on January 11 has violated a rising trendline. The violation confirms a reversal of the trend. Only a break above $52.53 could signal the continuation of the wave C towards $53.63.
On the daily chart, oil is pulling back towards $50.51, the 23.6 per cent retracement on the down trend from $76.90 to $42.36. A break below $50.51 could cause a loss to $47.40.
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