USO Update

Oil is now on track for its 4th consecutive daily gain and it appears, as usual, the bottom callers are in, just in time for what should be a little consolidation which will likely kick them out of the trade and turn them bearish again just as USO makes another leg higher.

Other than the Mass Psychology of calling the obvious long after it has occurred and taking it to an extreme of a "Bottom", which this clearly is not, the market is finally noticing what we have been forecasting for weeks, but it does look like we are at an area of natural consolidation, one I'm sure will be interpreted as "Oil is not at a bottom, it was a false start".

Lets just check the charts...

 On the daily chart, USO is currently at a gain of +2.36% as I write. I wouldn't judge the day's outcome by this early Doji Star candle, but there are some short term charts that look like a small consolidation is becoming more and more likely.

 This is the USO 2 min intraday chart with a negative divegrence, along the lines of a consolidation.
Remember, a consolidation can occur through price (pullback) or through time (lateral consolidation pattern or sideways).

The Brent/CL Futures are also showing intraday 1 min 3C weakness on this chart and that extends further out...

To the 5 min chart that looks more serious and the 7 min chart, by the 10 min chart price and 3C are in line, thus I don't see this as much more than a consolidation setting up, unless things were to materially deteriorate from here, but as we have talked about probabilities in place before a move even starts, USO has strong probabilities of more gains, in fact as a counter trend bounce/rally, I'd hardly consider this move as started.

 I think the 5 min USO chart best puts the consolidation probability in to proper scale and focus, vs. the positive divegrence that kicked off the move.

While the 2 min USO chart looks worse, this is just because it's a weaker timeframe so the divergence looks worse than a stronger timeframe like 5 min above, but this is a better indication of timing.

As for the probabilities...

This isn't even the strongest chart, but this 15 min USO leading positive divergence has plenty of gas in the tank, a plenty strong base to take it higher.

Consolidation is natural, it keeps an asset from overheating and seeing volatile corrections, I'm not concerned with it at all.

As for whether it's through time or price, we'll just have to wait and see, if it is through price it may offer a second chance buying opportunity for those who are interested.