U.S. oil prices fell to a 7-month last week on slowing economic growth in Europe and on the strong dollar rally. This morning oil prices rebounded slightly ahead of tomorrow’s Energy Information Administration report that many are expecting to show that oil supplies are falling.
The US Oil (weekly chart) bearish trend is finding tentative support with the low made earlier in January and just ahead of the major trendline support level. A breakdown of this key technical level could trigger a move toward the 90 handle. My targeted range for the remainder of the year is $86-$105. Critical resistance will come from the $100 handle initially and the $108 -$110 zone.
If the long-term support level will be respected, we may see a bounce aim for the $98 area.
The trade: Buy US Oil at 94.10 with a stop loss at 92.10 and a take profit at 98.10 The Risk/Reward Ratio is 1:2
Edward J. Moya
WorldWideMarkets Online Trading