US OIL – $41.20 became a huge level for crude in March when it experienced a 25% drop to $30.78. 

Since March, the oil price tested $41.20 on three occasions but failed to break through and hold. In July it finally pierced through and held above with now sighting levels pre COVID.

September is crucial for Oils next run.

Key Points:

  • Found support at Fibonacci 50% (30th July low to 5th August high range)
  • Fibonacci 50% and $41.20 price cluster
  • RSI crossing above oversold territory
  • $41.20 has been an important level for oil

Caution Points:

  • Price is below 200 EMA
  • Price is over stretched from 50 EMA

Key Levels:

Support – $41.20

Resistance – $42.00, 200 EMA, 50 EMA and $43.00

Entry Zone:

Optimal entry provides the greatest reward to risk ratio while supporting entry is a zone for reversal signals.

Optimal Entry – $41.27

Supporting Entry – $41.50

Candle Reversals for entry

  • Bullish Hammer
  • Bullish Engulfing
  • Bullish Piercing

 

The Risk:

As traders, it is your job to mitigate the risk and only trade structures that provide high probability and great reward to risk ratios.

If you are not comfortable with defined exit levels, experiment with Moving Averages to help set solid exit rules to protect your capital.

 

IF: Price breaks below $41.20 level – this would suggest the structure is not in our favour and would be wise to reduce exposure or close the trade until a solid signal gives us reasons to re-enter.

Reward / Reward Targets:

Optimal Entry $41.27 – Target 1 $43.50 = 7x Reward to Risk

Supporting Entry $41.50– Target 1 $43.50 = 4x Reward to Risk