USO has gapped down, I'm not sure whether it will make a gap fill, but for longer term position traders who have a short on USO like myself, it's shaping up. There may be a short term trade in here to.
As mentioned last night, USO was up for no other reason then dollar weakness yesterday, as you can see in red and the red arrow, today the white arrow shows dollar strength and USO is trading inversely to the dollar as it should.
The 3C short term chart has been negative on USO, even yesterday it was sold on price strength. Today you can see 3C is showing a negative divergence right in this area starting. For short term traders, a short could be initiated here with a stop just above the gap from today. I would personally use something like SCO or puts for the leverage.
The 2 min chart shows the same distribution yesterday afternoon and currently, in fact it is now leading negative, the worst kind of divergence.
The 5 min chart is also leading negative right now.
Longer term, and this is why I have held USO shorts, the hourly chart is deeply leading negative as USO has been largely in a rangebound lateral trend, this is where we most often see distribution. Any move to the highs of the range has seen a negative divergence send it back toward the lower end of the trading range.
There's an initial support level around $37.50 (red trendline) so I would keep any options trades short term for the time being and there is a second gap support level (yellow) around $36.50. Once both of these levels are broken, USO won't have much in the way of strong support and the longer term position trades should do well, especially considering the fact that the EU has punted on sanctions against Iran for another 6 months.
For any short term intraday trades, just keep an eye on the Euro, USO trades highly correlated to the Euro which is simply a function of the Euro making up 50% of the dollar index.
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