Taking a look at the chart on crude we see the price of oil is pushing above the $80 level yet again. This is not a good sign for consumers has gasoline prices are following to the upside. Economic impact aside we have to take not of the rise off the low in early February. We are up better than 12% on this move. How much higher does oil move is an important question. We have made two trips to this level over the last five months. Is this the time we break higher and push towards the $100 level again?

The commodity is worth watch and trading short term with USO. If you are interested buying and holding the commodity USL is the better choice as the ETF holds the forward 12 month contracts. USO is built for trading as the contracts expire every month. The chart below shows the uptrend in play,but the volatility is high. The first step is to see if the price moves above $80 on higher volume. If it fails the downside play is more attractive.

The second step is to look for a break above resistance at $83.50. This brings the longer term view of the upside into play. Either way the volatility in the sector makes it attractive for a short term trade if you missed the move off support near the $70 level. If you currently own it you would want to tighten your stops.

As with any investment risk evaluation is the number one priority. This is set by the strategy you implement to invest. Define your entry point, your stop loss and your target prior to investing. This gives you a clear view of what your risk/reward relationship is and how to approach each investment.

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