Crude Awakening Coming To Shorts? United States Oil Fund (NYSE)

NYMEX:CL1!   Light Crude Oil Futures
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Over the last month we have seen the price of Crude Oil             sell off about 10%. If someone was living under a rock for the last several weeks, they would think that geo-political tensions were easing and not escalating. Well, for whatever reason, the price has come in and is presenting traders with a compelling risk/reward trade to the long (up)side.

I have included a weekly chart of crude oil             below, and as you can see there is a fair amount of support at around the $96 level. That is where the 200 weekly MA (moving average) resides, and more importantly, an up sloping trendline . That line is pretty important as it has acted as support back in April 2013, and again in January 2014.

While I have used the Light Sweet Crude Futures chart, traders can also use the popular United States Oil Fund LP ( ETF ) (NYSEARCA:USO) to take this trade. Traders can enter this long trade at around $96 and could expect a bounce back up to the $100 level. The stop on this position would be the first daily close below the trendline , or one could use $95 as the stop. This would set up a $4 upside potential bounce, and the risk would be only $1. Use this chart to take your cues as to on when to enter and exit this trade, with such trading vehicles as the United States Oil Fund LP ( ETF ) (NYSEARCA:USO).

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Parm Mann
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