USO Trade-Set-Up

As was posted Tuesday when USO finally saw a break in 3C confirmation of price, giving us an edge,

USO Update which in Crude Futures terms looked like this...

The last USO update before Tuesday's linked above was MArch 31st precisely for this reason. To the left are the base lows in which a positive divegrence was put in, this would be an ideal long trade entry point. At all of the green arrows 3C (light blue) is in line with price, which tells us everything is moving as expected and there's no underlying activity whether accumulation or distribution that would give us an edge or foreknowledge of an impending price move or change in direction, that was until this week as posted above.

However once USO saw a serious downside move yesterday of over -5%, it wasn't the magnitude of the loss that told me a bounce was likely which would make for an excellent trade entry, it was the charts as posted yesterday in this update regarding a near term bounce , perhaps in to the gap created yesterday...USO Update and F_E_D Minutes

I have views on ?USO's primary trend and a nice long position in a trend trade, but I also believe USO is not quite done with a base of appropriate size to support such a primary trend (upside) reversal. The anticipated move lower in the dollar is only one of several catalysts that could force USO higher, I don't claim to know the reasons, I'm just following the charts.

So today, picking up where we left off yesterday in the post above as well as the Futures report at the end of last night's Daily Wrap, we foresaw a USO bounce that could be used, in some cases to close small long positions that have been taken at a small gain, which is better than sitting on dead money in my view and/or a swing short. We have a near 3/4% gain so far today, but I believe we are destined for a better entry and strong signals as to when to take it just as Monday/Tuesday's strong signals pointed to yesterday's downside and yesterday's strong short term signals pointed to today's bounce. We'll look for additional gains and the same strong signals to tell us when it's time to consider a USO trade.

So far...

This strong 60 min USO chart is just confirmation of the 60 min Crude futures above showing strong price confirmation and a recent negative divegrence finally.

 I believe we'll likely find an entry or exit somewhere in the yellow zone including a gap fill from yesterday, so the 18.50-$19 area, you might want to set price alerts. This by the way is the larger base area.

 The divergence on USO's chart looks very strong, but remember this is intraday 1 min chart, thus it's much more along the lines of the gap-fill type move we are looking for.

 intraday Crude futures are confirming the same...

As is a stronger 1 min leading positive divergence, but I don't see these doing much more than giving us a better entry, I don't see them continuing crude's recent trend, I believe the 60 min charts have the highest probability of a pullback toward the $16-$16.50 level thus making this a swing trade, perhaps leverage would make it more attractive.

I'll be keeping an eye on USO looking for the appropriate timing for the best entry, perhaps we even get a nice options (put) entry which would be my first choice.