USOil: Two Key Support Lines To Watch Near 76.50 and 75.88
The medium term daily candle chart below shows the price history of USOil, a Contract for Difference (CFD) that aims to track the underlying spot price of US Crude Oil. Today this CFD is trading near 77.27 around time of publication.
Since the last post about USOil in the Ideas You Can Trade series, a temporary floor was described as enabling a brief short term recovery which could be followed by a more serious drop.
That recovery followed and USOil failed to regain 80.00 in the last few days, and the expected bearish continuation mentioned in the last post will likely follow from current levels if support fails under 76.50 and the prior low reached near 75.88, both key support levels to watch.
If however support is maintained at these levels a more sustained recovery could follow. Considering that volatility has eased in recent days, a false breakout to either side of support could be less dramatic, enabling easier confirmation of the trend direction, yet USOil is still ripe enough for an explosive move downward if support fails, as the overall trend direction is still bearish.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 78.11 with a Limit to take profit @ 78.66 and a stop-loss @ 77.56 Risk/Reward Summary: Limit risk = +55 points profit /(-55) Stop-loss risk = Gain to Loss ratio = 1.00
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 76.49 with a Limit to take profit @ 75.53 and a stop-loss @ 77.29 Risk/Reward Summary: Limit risk = +96 points profit /(-80) Stop-loss risk = Gain to Loss Ratio = 1.20
Daily Candle Chart: