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CFD: Ideas You Can Trade - USOil Support Building Above 44.00

Posted by Steven Hatzakis on Jan 30, 2015 8:00:00 AM

USOil: Support Holding Above 44.00 As Steep Bearish Momentum Eases, After Yesterday's Multi-Year Low

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 44.82 around time of publication.

Last time USOil was reviewed in Ideas You Can Trade was at the end of last month when a triangle formation had appeared and since then a breakout to the downside followed - bringing the price of this commodity to fresh multi-year lows. 

While a new low was reached just yesterday near 43.50, support around 44.00 has been building as USOil has been mostly sideways in the last six trading sessions and within an tight range (when compared to recent volatility).

Either the reduced volatility or potential floor around 44.00 that has appeared may be to blame for the curtailed bearish momentum - when compared to the previous dive which had seen the price fall from as high as 80.00 in November to almost half that near current levels.  

If the floor near 44.00 holds then a bullish continuation may unfold with buyers looking for confirmation above 47.50 whereas sellers may expect a bearish continuation if support fails below yesterday's low of 43.55.

Below are examples of how to trade a bullish continuation or a bearish reversal:

1.  BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 46.72 with a Limit to take profit @ 47.50 and a stop-loss @ 46.11 Risk/Reward Summary: Limit risk = +78 points profit /(-61) Stop-loss risk = Gain to Loss ratio = 1.27

2.  BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 43.25 with a Limit to take profit @ 41.80 and a stop-loss @ 44.66 Risk/Reward Summary:  Limit risk = +145 points profit /(-141) Stop-loss risk = Gain to Loss Ratio = 1.02

Daily Candle Chart:

USOilDaily January 30 2015 note

 Long Term Weekly Candle Chart:

USOilWeekly January 30 2015 note LONGTERM

Topics: commodity, CFD trading, Crude, US Oil, technical analysis, cfd, WTI, USOIL, West Texas Intermediate crude oil, West Texas Intermediate, $OIL


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