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CFD: Ideas You Can Trade - USOil Drop Under 49.00 Would be Bearish

Posted by Steven Hatzakis on Feb 25, 2015 9:41:00 AM

USOil: Following Bearish Resistance Line, Break Under 49.00 Would Hinder Recovery From January 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 49.14 around time of publication.

Last time USOil was reviewed in Ideas You Can Trade support had been reached near 44.00 and subsequently recovered towards current levels over the last few weeks, as that area had been deemed a potential floor (where a reversal could follow).

After reaching a medium term bearish resistance line (red line on chart below) on February 17th just under 54.00 - the trend is moving bearish again - and has since followed down a shorter-term bearish line (see magenta colored line on chart below) - which has brought prices to just above 49.00 today.

If a break below 49.00 is sustained a bearish continuation should pick up speed, whereas if support holds around this key level a recovery would follow. 

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

1.  BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 49.71 with a Limit to take profit @ 50.22 and a stop-loss @ 49.32 Risk/Reward Summary: Limit risk = +51 points profit /(-39) Stop-loss risk = Gain to Loss ratio = 1.30

2.  BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 48.85 with a Limit to take profit @ 48.40 and a stop-loss @ 49.20 Risk/Reward Summary:  Limit risk = +45 points profit /(-35) Stop-loss risk = Gain to Loss Ratio = 1.28

Daily Candle Chart:

USOilDaily February 25 2015 note

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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