Overview: We’re observing a bullish setup on TVC:USOIL , as price action suggests a strong reaction at critical support levels, indicating potential upside movement.
Key Observations: The 1-hour chart presents a descent into a key support zone marked by an FVG (Fair Value Gap) around $85.40. The market response here will be crucial to validate our bullish bias. Fibonacci retracement levels add confluence to the support zone, particularly at the 0.75 level ($85.51), which aligns closely with the current price, suggesting a strong area for potential entry. The presence of sell-side liquidity below the current support zone could act as a springboard for price reversal if buyers step in aggressively.
Trade Strategy: Entry is considered around the $85.51 level, exploiting the confluence of the Fibonacci level with the support zone. A stop loss can be set just below the most recent swing low and the 1 Fibonacci level ($84.81), to protect against any breakdown in price. The initial target for the trade would be set towards the $87.60 level, which is in proximity to the recent swing high, offering a reasonable risk-to-reward scenario.
Risk Considerations: As with all trades, this setup carries inherent risks, and a stop loss is essential to cap potential losses. Traders should ensure that the position size reflects their risk tolerance and account equity.
Contextual Note: This trade idea is predicated on the assumption that the identified support zone will hold firm and act as a catalyst for upward price action. Factors such as inventory data, geopolitical tensions, and global economic indicators can significantly influence oil prices.
Disclaimer: Please note that this trade idea is based on current market analysis and is not financial advice. Traders should perform their due diligence and trade within their risk parameters.