USOil: 91.21 Next Downside Target, if Support on 92.50 Fails
The daily candle chart below shows the price history of USOil over the medium term, and trading near 93.83 around time of publication today.
The USOil Contract for Difference (CFD) which aims to track the spot price of US Crude Oil was last reviewed in the Ideas You Can Trade series in Mid-August when the downtrend was described as "not over."
Since then USOil traded lower where support was eventually found over the last few trading sessions near 92.50. If support on this price fails, the next target for support is on the year-to-date (YTD) low of 91.21 which was also noted in the last post.
If however the support that has been building around 92.50 can be maintained and a floor is established a more serious recovery to the upside may be attempted to where USOil may try to breakout of the bearish channel it still remains within.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 96.01 with a Limit to take profit @ 96.80 and a stop-loss @ 95.56 Risk/Reward Summary: Limit risk = +79 points profit /(-45) Stop-loss risk = Gain to Loss ratio = 1.75
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 92.47 with a Limit to take profit @ 92.00 and a stop-loss @ 92.89 Risk/Reward Summary: Limit risk = +47 points profit /(-42) Stop-loss risk = Gain to Loss Ratio = 1.11
Daily Candle Chart: