USO Linear Regression

USO is an interesting trade, it showed accumulation, it broke out. The longer term charts of USO all seem bullish for a decent size bounce. I have a little trouble reconsiling the strength in the dollar that is likely to contnue (remember the Bush era, a weak dollar policy is what pushed crude to those trend highs), now we are in an environment where, despite the Fed's actions, global events are dictating dollar strength, this is at odds with rising oil, which is at odds with the charts that have so far been effective. Unless some one has a really good fundamental reason that oil should surge that may be more prominent then the dollar correlation, this makes me a little nervous. In any case, a linear regression channel is a great way to objectively look at price action. I've set one up below with the settings if you want to copy it for yourself. You can always use www.FreeStockCharts.com for realtime data (no 20 min exchange delay).

The channel may need some adjustment as the trend progresses, but using linear regression, just as drawing trendlines, be sure to use objective settings, our subconscious easily creeps in to move a line slightly in a hopeful spirit, but it is doing a disservice to you.

The other interesting things on the ONE MINUTE chart (lets keep that in mind, trends that last days or weeks will see plenty of intraday pullbacks-you can apply the same LN channel to longer range charts. Getting back to my point, MACD and volume are both fading into the trend which is not a strong sign. I'd watch for a break of the bottom of the channel at the red box for short term traders.