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Today’s Trading Edge: Oil pulls back towards key support

Posted by Edward Moya on Jan 19, 2015 9:23:00 AM

WWM US OIL JAN 19 2015

Oil prices began the trading week lower as investors returned to scaling into their bearish bets that a glut in global supplies will drive the commodity even lower.  Seven months of consecutive weakness saw US oil find tentative support at $44.20 on January 13th.  After making that low, price has stabilized but has been unable to have a daily close above the psychological $50 handle. 

Price action on the 60-minute US oil chart show that price may find a confluence of support from a bullish Gartley pattern and trendline support from the key low made last week.  If price does produce a v-shaped bounce after sliding to $47.45, key resistance will come from the $50 handle.  If price manages to have two daily closes above that upside level, a stronger rally could target $55.08.

To the downside, bearish momentum may target $45 if the pattern is invalidated. 

The trade: Buy US Oil at $47.75 with a stop loss at $49.55 and a take profit at $47.25  The Risk/Reward Ratio is almost 1:4

Edward J. Moya

Technical Strategist

WorldWideMarkets Online Trading

Topics: Crude, US Oil, crude oil, West Texas Intermediate crude oil, $OIL, oil price

 

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