USO update

Yesterday I warned that USO, although I feel bullish for the intermediate term, was bumping up against resistance and 3C was showing signs of a pullback, all the charts can be found in this post from yesterday afternoon.

Here's an update..

 Here's what prompted yesterday's warning, a negative divergence at yesterday's highs/resistance

 And on a 15 mn chart, you can see today's early attempt at strength was sold as 3C moves lower. Right now 3C is in line with price.

 There's a slight 5 min positive divergence, but I think it isn't going much further then to create the flag formation already in place.

 Note the Tower Top formation in USO as well. My initial target yesterday was the $38 area, we're $.45 past that and it appears we may have some more to go.

If we take this price formation from the decline to the bear flag and extrapolate the implied pre pattern target, we come up with a downside target of $35.70 with the flag's current position. I don't see anything to suggest this is the bottom of the pullback so I'm assuming we have more downside to go. Since USO is widely watched and this price pattern is widely followed by technical traders, their bets are going to be for a downside break from the flag, they'll probably be right, but they'll most likely get knocked out of the trade first with an upside head fake breakout of the flag. This will make technical traders think the bear flag has failed and what are you supposed to do on a failed pattern, take the other de of the trade. If this happens (an upside breakout of the flag) and technical traders take the bat, that will likely be the cue that the downside move s about to begin. As of now, that's my opinion of USO. If anything in 3C changes to show support, I'll update the situation.