By Russell Glaser – The 4-hour chart shows a trading range along with a buy signal that could indicate a rise in spot crude oil prices above the static level that the commodity has seen over the past two months.
Looking at the 4-hour chart for spot crude oil, a trend line has begun on May 25th and shows the appreciation for the pair over with the price action taking place above the trend line. It is a modest uptrend as the slope of the trend line is less than a 45 degree angle, but nevertheless an up sloping trending line.
A minor trend line has been included for when the commodity surged higher on July 7th. Since then the price has risen and dropped back towards this minor trend line and has created an opportunity to go long on the commodity.
When the price fell to a low of $76.15, this was close to the minor trend line. At the same time a bullish cross was forming on the slow stochastic oscillator, providing an a buy signal. The price bounced off of the minor trend line and has since moved higher.
Buying near a trend line can many times be a good opportunity to enter following a pullback in the price. For more conservative traders, a stop can also be placed underneath the minor trend line should the price break lower.
Traders can target the first resistance level (R1) at a price of $78.15. A close above this level would then move the next price target to just below the $80 (R2).
A protective stop can be placed below the support level of $75.65. A close below this level would nullify the minor trend line and the price could then test the next support level at $71.00 (S2) along with the long term trend line.
Forex Market Analysis provided by Forex Yard.
© 2006 by FxYard Ltd
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