By Mark Shenk
Jan. 26 (Bloomberg) -- Crude oil may bounce to near $90 a barrel by the end of the second quarter, according to a technical analysis by Auerbach Grayson, a brokerage in New York.
Futures are set to reach $89.84, which corresponds to the 50 percent Fibonacci retracement of the range generated by the record high of $147.27 on July 11, 2008, and the low of $32.40 touched on Dec. 19, 2008, according to Richard Ross, an analyst at Auerbach Grayson.
“We continue to see higher highs and higher lows, which signals that we’re in an uptrend,” Ross said in a telephone interview. “There’s been a lot of sound and fury recently with $12 moves higher or lower. We’re still looking at a violent grind higher.”
Prices would have to fall below $72.50 a barrel to invalidate the trend, Ross said. The $72.50 area coincides with a trend line touching lows in mid-May 2009, and $69.51, the close on Dec. 14.
Crude oil for March delivery rose 72 cents, or 1 percent, to $75.26 a barrel on the New York Mercantile Exchange yesterday.
The Fibonacci sequence was identified by Italian mathematician Leonardo Fibonacci in the 13th century. The ratio between the numbers, about 0.618, is known as the golden mean, and is used by technical analysts to find levels of resistance and support.
--Editors: Joe Link,
To contact the reporters on this story: Mark Shenk in New York at +1-212-617-4331 or mshenk1@bloomberg.net
