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CFD: Ideas You Can Trade - USOil Pullback Steepens

Posted by Steven Hatzakis on Aug 1, 2014 5:36:00 AM

USOil:  Bearish Momentum Looking For Support, 91.21 Next Possible Target

The daily candle chart below shows the price history of USOil over the medium term, and trading near 97.46 around time of publication today.

Last time this Contract for Difference (CFD) - which aims to track the price of US Crude Oil - was reviewed in the Ideas You Can Trade series, it was described as back in bearish territory. Since then USOil traded just under 100.00 then rebounded briefly to 105.00 only to return lower towards current levels over the last ten trading days. 

Yesterday USOil broke below 99.00 and is testing a light support line near today's low which could provide a reversal - although stronger support exists closer to 91.21 - the support level found at the start of 2014, and the next possible target. 

From a longer term perspective looking at the weekly candle chart further below, it appears the USOil pullback isn't over, as support was just breached to the downside, and a bearish continuation could therefore follow.

Looking at the approximate distance in-between the intermittent bullish support lines (blue lines on first chart below) which have repeated of the recent history, a short term recovery could also follow before the pullback is over, such as had occurred with the volatility of the past few weeks with USOil (i.e. more of the same).

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

1.  BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 99.09 with a Limit to take profit @ 99.90 and a stop-loss @ 98.33 Risk/Reward Summary: Limit risk = +81 points profit /(-76) Stop-loss risk = Gain to Loss ratio =  1.06

2.  BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 96.84 with a Limit to take profit @ 95.43 and a stop-loss @ 98.01 Risk/Reward Summary:   Limit risk = +141 points profit /(-117) Stop-loss risk = Gain to Loss Ratio = 1.20

Daily Candle Chart:

usoildaily august 1 2014 note

Weekly Candle Chart (Longer Term View):

usoilweekly august 1 2014 note

Topics: commodity, CFD trading, Crude, US Oil, technical analysis, cfd, USOIL

 

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