Tuesday, April 13, 2010

Crude Retracement

After oscillating between $70 and $83 a barrel for 6 months, crude oil finally broke out of its trading range two weeks ago. After rallying to $87, crude has since experienced an orderly retracement back to its breakout point. If you subscribe to the notion that prior resistance becomes new support, this may be an area worth watching closely for bullish entries. If oil plunges right back into its old trading range, the validity of last week's breakout will be brought into question.

[Source: MachTrader]

For non-futures traders, the United States Oil Fund (USO) is probably your best bet for a proxy of crude oil. In my experience it's done a well enough job in tracking crude oil to make it a viable trading vehicle.

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