USOil: Same Support Line Still Holding as Bullish Continuation Unfolds With Today's Rebound Higher
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 60.43 around time of publication.
Last time USOil was reviewed in Ideas You Can Trade at the end of last month - the same bullish trend line was supporting prices and was being tested (see green line on chart below).
Since then USOil has traded higher and has respected this support line again with today's low rebounding from that line towards session highs today - just over 61.00. If a bullish continuation unfolds - as it has been - then USOil should test a higher-high. On the other hand, a pullback towards the support line near today's low could be either an entry point for bullish traders expecting support on that line again, or if that support line fails - an entry for bearish traders expecting a pullback lower.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 61.06 with a Limit to take profit @ 61.89 and a stop-loss @ 60.29 Risk/Reward Summary: Limit risk = +83 points profit /(-77) Stop-loss risk = Gain to Loss ratio = 1.08
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 58.62 with a Limit to take profit @ 57.38 and a stop-loss @ 59.80 Risk/Reward Summary: Limit risk = +124 points profit /(-118) Stop-loss risk = Gain to Loss Ratio = 1.05
Daily Candle Chart: