USO Update

Our last update for USO was Friday, Feb 13th, USO Gap Fill Likely which was dead on accurate today. Here's the first paragraph of that post,

"Looking at USO as it approaches resistance that marks the start of the next leg up and the previous leg's consolidation highs, it looks like it wants to fill today's gap or at least some portion of it."

Here's the USO daily chart and intraday charts...

 USO daily with the gap at the yellow arrow and today's intraday lows filling the gap.

This is the same on a 60 min chart, but this isn't the first gap in USO so it wasn't so much the gap that led to Friday's analysis of USO, it was the 3C charts, especially the short term 1 min intraday, here's the chart from Friday's post, USO Gap Fill Likely

Note the deep leading negative divegrence Friday, but still mostly contained to a 1 min chart.

The /CL - Brent Futures look pretty good otherwise. As for USO which is WTI crude...

 This is the same 1 min intraday chart with Friday's divergence and another today after the gap fill and bounce higher.

Since our initial pullback/consolidation target below an ascending triangle was hit, it's time to re-draw the trendlines which gives us...

a lateral consolidation or rectangle. The technical implications, considering the preceding trend would be to look for a breakout to the upside and a new leg higher, but we also have a defined level of support, which makes a stop run before any upside breakout an increasingly likely prospect. Remember this chart or come back to it for the trade set up.

Looking at a 3 min chart, we can see a larger positive divergence or gas in the tank and two smaller negatives from Friday and today, this suggests that any head fake move below the rectangle would be a head fake move as the distribution signals are not very strong, this is only a 3 min chart and they are barely showing up here/

 a stronger 5 min chart shows what looks like a perfect 3C/confirmed consolidation through time (laterally). Note there are no negatives of concern, again suggesting a consolidation, but the short term charts and the rectangle make an increasingly compelling case for a stop run below the rectangle which would be an excellent entry so long as the move was confirmed as a head fake with short term 1-3 min charts showing positive divergences in to any break of the rectangle's support in the area of $17.95-$18 and below.

The 30 min chart shows plenty of gas in the tank, the counter trend rally we were looking for and I think that is still very much on the table, a head fake move below the rectangle would make for a nice call entry or just a long entry.

 Our X-Over Screen has recently given all 3 confirmation signals for a long and as is usually the case, the first pullback has held up at the 10-day yellow moving average, everything else looks good.

Part of me is wondering whether we get a head fake move at all based on that and the trend channel below, part of me is wondering if a head fake move/stop run is on an intraday basis only and therefore does not violate either the X-Over Screen or the Trend Channel . The intraday 1-3 min charts over the next day should continue to tell us what the highest probability is in relation to a possible head fake/stop run before the next leg up, it would be helpful, but being all of the above and especially the X-Over and Trend Channel screens are where they are, if you are interested in the trade, I'd set USO price alerts for a move below $18 as a head fake move might be intraday only and we'd need to confirm it pretty fast, which would make an excellent call position as well.

The daily trend channel held the entire trend down until the stop at the white arrow and is now holding the new uptrend with a stop on a closing basis just above $18, this is why I suspect any head fake move may be intraday only and pretty fast.

I'll be setting alerts as this would be a fantastic entry since we called the pullback/consolidation.