USO Follow Up

If you saw yesterday's USO Update then you probably know we were expecting an additional pullback and perhaps a stop-run before USO started its next leg higher, if not check out the linked post above as it gives a low risk, high probability entry and the areas to watch for such an entry.

USO is down overall since the F_O_M_C minutes, but it was choppy and down on a strong move down in the $U?Sd which would normally send $USD denominated assets higher, but so far it's moving in the direction we expected earlier from last week and yesterday. There are some early initial signs that we may be right on with yesterday's set-up.

 This is the new trendline / rectangle consolidation or through time laterally, but I suspected it will pullback and perhaps even below the $18 area to put in a stop run before a new leg higher. Because of price action I had to re-draw some additional trendlines, an ascending triangle (bullish) and it looks like we may just break below it as expected yesterday.

 As of the capture of this chart, price was sitting right on trendline support, it looks like it will slip below.

 The main counter trend rally chart is now the 2 hour positive divergence, still not the kind of chart that says oil has bottomed, it's more along the lines of a counter trend rally which is sharper and stronger anyway, it's just not a change in trend.

 The 15 min USO chart through the consolidation has been pretty clear that a pullback to the lower end of the consolidation range is probable which means a stop run below the range is highly probable and that's where we would want to enter any long positions in USO on a discount and a timing basis.

While this is EXCEPTIONALLY early, the thing we look for in a pullback or decline/head fake move is accumulation of lower prices, so far, even before the F_O_M_C, lower prices have initially resulted in the start of accumulation of lower prices which lends credibility to yesterday's planned set up trade, however this is just a start and there's more confirmation to go, but all in all I think this is very high probability for a second and much stronger leg higher after a pullback and likely a head fake/stop run.