USO Trade/s Set-up

Initially I was looking at USO as a long/bounce trade and I still think there's a decent long bounce trade there, but the bigger trade is shorting the bounce as you get a better entry at much lower risk, of course there needs to be a reason to short USO. Upon a closer look at the charts for Brent Crude Futures and WTI, it looks like both are set to come down, what the catalyst is, whether political as there's a strong correlation between the price of oil and economic activity or perhaps something in the works as far as a counter-insurgency in Iraq, who knows, but both Brent and USO (WTI) are showing the same trade opportunities/set ups.

 15 min Brent Futures look like they are accumulating for a bounce, much like USO.

However looking at a bigger picture daily chart, you can see the cycle in oil with accumulation around the start of 2014 and a distribution cycle  at the last high, actually starting a bit before that.

 This is a weekly chart of USO, there seems to be a range in which they just won't let oil move above and USO took a pretty severe beating at the last high with a move down of 6%.

The Daily USO chart, also note volume recently, this is not only not good from a longer term perspective, but from a more immediate, shorter term trade perspective, it is similar to a short term selling climax which gives USO the opportunity to bounce which I think can be traded long, but once it gets near the former highs, it should be setting up for a closure of the long and a new entry in to USO short.

 Again, like Brent Futures, intermediate term charts like 10 min show near term accumulation for a bounce, I do think USO needs some more lateral trade to form a wider reversal process/short term base, but that's about it.

 Very short term, lower lows are being accumulated as you can see above on an intraday 1 min chart and that's accruing on the intermediate charts like the 10 min above.

 However just like Brent futures, we see a longer term cycle taking shape (remember the 4 stages of a cycle, 1=base, 2=mark-up/rally, 3=top/distribution and 4= decline. We see the same accumulation/base or stage 1 at the start of 2014 like Brent futures and the same recent distribution at the last highs. Thus a short term bounce can be piggy-backed as a long trade until we get closer to the recent highs and see distribution signals on intermediate and short term charts, then exit the long and enter a short trade.

Like Brent Futures, USO's daily chart shows the same exact signals, accumulation in to 2014 lows and recent leading negative divergences at the recent highs.

I'd look for a little more lateral or sideways like trade in USO and I'll keep an eye on the very short term timing charts for a potential long set up and we'll just go from there, both trades look strong.