USOil: January 29th Low Reached Again as Double-Bottom on 43.55 is Tested After Oil Moves Lower From Last Week's Drop
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 44.09 around time of publication, and lower from last week's plunge on Friday.
Last time USOil was reviewed in Ideas You Can Trade support above 49.00 was barely holding and the expectation was that a break under that price would be bearish. Since then USOil did trade lower and hit its January 29th low of 43.55 - a potential double-bottom which could hold if enough support is established here to make another recovery.
However, if this support line near 43.55 fails, a bearish continuation should unfold whereas if the above mentioned double-bottom reverses the plunge of the last few days - then prices could recover in the short term - otherwise 40.00 could be the next downside target in the short term.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 45.01 with a Limit to take profit @ 46.00 and a stop-loss @ 44.49 Risk/Reward Summary: Limit risk = 99 points profit /(-52) Stop-loss risk = Gain to Loss ratio = 1.90
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 43.55 with a Limit to take profit @ 42.11 and a stop-loss @ 44.21 Risk/Reward Summary: Limit risk = 144 points profit /(-66) Stop-loss risk = Gain to Loss Ratio = 2.18
Daily Candle Chart: