USOil: Bearish Momentum Accelerated In Downtrend
The daily candle chart below shows the price history of USOil over the medium term. This Contract for Difference (CFD) aims to track the spot price of US Crude Oil. USOil is currently trading near 84.69 around time of publication today, and after plummeting in yesterday's trading session.
Following yesterday's dive where it reached 83.57, USOil has fallen over nearly 1000 points (about $10.00) within the last two weeks (correction from days), piercing just under the November 2012 support line near 84.00 and is still within close reach of the July 2012 low of 82.07.
WorldWideMarkets' Chief Market Strategist Joseph Trevisani highlighted the underlying drivers affecting this commodity during yesterday's trading session, in a article published in the WorldWideMarkets Community.
Last time we reviewed USOil in the Ideas You Can Trade series, a key support line had failed and the trend was described as very bearish (if the breakout could be deemed genuine).Since then USOil has indeed become very bearish and may continue to behave as such if support isn't found near current levels.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 85.92 with a Limit to take profit @ 87.80 and a stop-loss @ 84.50 Risk/Reward Summary: Limit risk = +188 points profit /(-142) Stop-loss risk = Gain to Loss ratio = 1.32
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 83.54 with a Limit to take profit @ 82.17 and a stop-loss @ 84.21 Risk/Reward Summary: Limit risk = +137 points profit /(-67) Stop-loss risk = Gain to Loss Ratio = 2.04
Daily Candle Chart:
Weekly Candle Chart: