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US Oil : Ideas You Can Trade - steep short term bullish channel fails

Posted by Steven Hatzakis on Jul 24, 2013 12:47:00 PM

US Oil : Steep bullish channel fails, support tested on bullish resistance line

The long term chart shows US Oil ascending a steep short term bullish channel (point 1 on chart) which it just broke out of to the downside and looking for support along the upper resistance line of a long term bullish channel (point 2) and trading near $105.14 as of publication.

Despite today's trading session, the trend is bullish overall and momentum has been fueled after finding support on a long term bullish support line (point 6) and a successful upside breakout of medium and long term bearish resistance (point 5 & 7). These events occured  since a previous article on US Oil in June 2013 where some of these items -among others- were discussed.

If the short term bullish channel (point 1) can be regained, a continuation of the steep bullish trend may continue with a target near $110.00 and $115.00 (point 8) which could act as resistance.

However, if the current bullish momentum cannot be maintained and the support found on the bearish resistance line of the long term bullish channel (point 2) fails, then US Oil may follow down a short term bearish channel similar in slope to those previously observed (point 4) which could repeat and with a target of the medium term bullish support line (point 3) just below.

  Below are examples of how to trade a bullish continuation or a bearish reversal:

1.  BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 106.43 with a Limit to take profit @ 108.53 and a stop-loss @ 105.53 Risk/Reward Summary: Limit risk = +210  points profit / (-90) Stop-loss risk = Gain to Loss ratio =    2.33

2.  BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 104.85 with a Limit to take profit @ 103.49 and a stop-loss @ 105.53 Risk/Reward Summary:   Limit risk = +136 point profit / (-68) Stop-loss risk = Gain to Loss Ratio =  2.00

Long term daily candle chart:

usoildaily july 24 2013 note

 

Zoomed in view:

usoildaily july 24 2013 note zoomed

 

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