USOil: After losing 62.50 and the prior bullish trend line, support barely holding-on and tested by today's 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 59.19 around time of publication.
Last time USOil was reviewed in Ideas You Can Trade earlier in May, the bullish support line (above current prices) that was lost last Thursday - was still holding, and a higher-high was hit on 62.50 before the decline towards current prices followed since then.
Today USOil's low coincided near a recently emerged support line drawn from the March 18th low and last Friday's low, which means that prices are holding on the edge of support.
If the support hit on today's low can sustain USOil to continue a bullish ascent, then a recovery from last weeks dive from 62.50 should continue, whereas if today's low is breached then a sharp bearish drop should resume.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 59.83 with a Limit to take profit @ 60.99 and a stop-loss @ 58.99 Risk/Reward Summary: Limit risk = 116 points profit /(-84) Stop-loss risk = Gain to Loss ratio = 1.38
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 58.69 with a Limit to take profit @ 58.19 and a stop-loss @ 59.14 Risk/Reward Summary: Limit risk = 50 points profit /(-45) Stop-loss risk = Gain to Loss Ratio = 1.11
Daily Candle Chart: