USOil: Lower line of sideways range reached again today as 58.00 technical support level tested again
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. This CFD is trading near 58.45 around time of publication - after bouncing from a low of 58.01 earlier today.
USOil was last reviewed on June 19th in Ideas You Can Trade when a pattern was forming between a bearish and bullish line within the overall sideways range. Today USOil hit the lower line of that range - on 58.01- a key support level that has held the trend over recent months.
With volatility higher today in global markets a change in the trend could be brewing and a break-below 58.00 could signal such change, whereas the bounce that already occurred indicates buying at that level. On the other hand if intraday profit taking and overall selling pressure resumes further then 58.00 will be a key level to watch for a bearish continuation or reversal.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 59.01 with a Limit to take profit @ 59.99 and a stop-loss @ 58.11 Risk/Reward Summary: Limit risk = +0.98 points profit /(-0.90) Stop-loss risk = Gain to Loss ratio = 1.08
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 57.92 with a Limit to take profit @ 57.01 and a stop-loss @ 58.81 Risk/Reward Summary: Limit risk = +0.91 points profit /(-0.89) Stop-loss risk = Gain to Loss Ratio = 1.02
Daily Candle Chart: