USOIL has been acting choppy for the past few weeks, leading to some difficult scenarios to trade. However, we now may have a clearer, albeit slightly hidden, short trade setup now available on the daily time frame for this asset.
Fair Value Gap Short Setup on USOIL (WTI)
Several bearish confluences indicate a potential decline in USOIL, making this a viable short trade opportunity.
Bearish Daily Fair Value Gap: We have a daily FVG from $78.41 to $78.79 created by the rapid price decline formed last week.
EMA Cluster at FVG: EMA 50, 100, 200 are clumped together between $78.61 – $78.81, which aligns with the daily FVG’s location.
Anchored Volume Profile POC (Red Line): By adding an anchored volume profile on May 1st, gathering volume data over USOIL’s consolidation in May, we get a point of control at $78.8890.
With so many bearish confluences concentrated in one area, I would be keeping a close eye on USOIL if it reaches the $78.6 mark and forms a bearish daily candle. This, to me, would confirm the presence of sellers stepping in to push the price down.
| Potential Short Trade Setup: • Entry Point: $78.6 – $78.8 (if price rejects from this level) • Take Profit Targets: • First Target: $72 (0.768 Fibonacci Retracement) • Second Target: $68.8 (Major Low) |
What is a Fair Value Gap?
Fair value gaps are price gaps between three consecutive upwards or downwards candlesticks that typically get filled and act as a point of reversal. The distance between the first candle’s wick and the third candle’s wick make up the fair value gap.
