USO Update

I think we are near a reversal to the upside for oil, both USO (WTI) and Brent, this looks like it will be a decent swing long, I'll update when I see high probability entry signals which I don't expect until at least the majority of today's op-ex pin (which is clearly in place) is done.

I have to admit that USO November $37.50 Call options have not gone the way I hoped and are down significantly, but after watching GDX which was also down significantly move to almost a single digit loss this week alone, I still have reasonable hopes based not on hope, but on objective evidence and here's the USO/Oil update.

 This is the USO channel that price fell out of, a Channel Buster of sorts and I was looking for a move at minimum back in to the channel (Shake out the shorts) in the intermediate term, long term I'm not making any bullish arguments for oil.

You can see the orders/stops were hit on the first intraday break of support (1st red arrow to the left) as orders placed with brokers were hit, this is one reason I always keep stops and orders mental and never place them with brokers, I've been wiped out too many times on false intraday moves and the second reason is, "No matter what your broker sys about orders being invisible, they are making a good portion of their income from volume rebates or order flow so they aren't on your side, just assume if you place an order "limit, etc." to be executed in the future with your broker, all of Wall St. can see it and you wouldn't play poker by showing everyone your cards would you?"

The volume spike at the white arrow looks like exhaustion selling or capitulation and price since tends to confirm.

The USO 5 min chart looks sloppy in the range I was hoping to see the upside move launched from, but that range became too obvious and it too was taken out (hitting stops and orders just below it), but there is now the first clear divergence since the USO top in the channel.

The same is true of the 10 min chart

However, this is where action gets interesting, a fast leading positive divegrence on the 30 min chart, this is confirmed by Brent Crude Futures as well...

 Brent Crude Futures 30 min leading positive.

The hourly chart removes a lot of detail/noise and uncovers the larger trend, in that sense it appears the initial expectations are still intact, furthermore the /CL-Brent 60 min futures confirm this chart as well.

I didn't want to draw too much on the divergence because it's distracting from the strength of the divergence. We have confirmation not only between WTI (USO), but Brent crude as well.
 

The Trend Channel shows the uninterrupted uptrend with no stop out until the channel is broken, ironically it's this same stop around $37.30 that is now the buy to cover short stop or will be soon.

Essentially we have some pretty clear technical patterns and I think we have at least a few set ups, the Channel Buster at #1 I don't think is a complete story yet, the bearish Descending Triangle at #2 is a bearish consolidation (sideways)/continuation (down) pattern, technical traders expect that, they will short that and the supply created by their shorting is easily accumulated in size, thus the 30/60 min charts' strong recent leading divergences at #3. The final story to the Channel Buster would be the short shakeout with a move up to the Channel, preferably inside as Technical traders would expect a failure of a test of the channel, a move inside will force them to cover creating a short squeeze and sending oil even higher in the channel, perhaps even above it, but it would need to break the Trend Channel Stop.

I'm sticking with USO, I'll update it as well if/when I see a very strong set on intraday signals if anyone is interested in trying a new position with USO.