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
WorldWideMarkets Online Trading