(Note from Tim: 2sweeties is resuming more frequent posts here on Slope, and this is another. With all humility, and mainly because I’m talking my book here, I disagree with a bullish disposition toward crude oil, but Lord knows I’ve been wrong on occasion before. Here ya go:)
This trade could work as quick trade with a target around ~16, but if after that you want to hold with a Trailing Stop in the hope of a much larger uptrend… you can do that, maybe you are lucky and it works.
To find where to exit our trades, we usually check the opposite model direction, for example if you enter a trade LONG with the LONG model, then you can use the SHORT model to know where to exit and take profit.
Let’s have a look to USO’s DAILY chart:
Last week USO closed the week down, so it is also possible that we have a small bounce DAILY and then a lower price by the end of the week: take this trade lightly, chase a small gamble on a quick price rebound, that is our goal.
Here below we can see that for this specific retracement pattern, our model indicates the price area between 14.98 and 14.18 as the area where it is most common for this type of DAILY retracement down to end (and then reverse up, be it a small pop or a fully fledged uptrend).
These are the recommended price levels where you can accumulate USO LONG positions, you can use a Stop Loss if you are unsure, or you can use averaging down once the indicator is equal or greater than 75%. If USO drops to 13.20, get out, that is your Stop Loss.
Click here if you want to gain access to all our quantitative trading models, we cover a number of selected ETFs, FX Spot, Indices and Futures markets (full list).
