USO

In yesterday's early morning USO update, I showed some short term charts that suggested a bounce in USO.

Let's take a look at the current charts.

 USO 60 min chart-in white is the channel buster and subsequent decline, in yellow is the heavy volume (important point-must be within an established decline) and some long lower wick candlesticks suggesting a reversal to the upside-this gives no target, just a reversal. In green, the most common place for a bounce to move to, the lower end of the channel or "kissing the channel good bye".

 The 1 day chart also confirmed the strong probability of a reversal (again, no target implications, just a reversal) with a hammer reversal candle and heavy volume.

 USO 5 min 3C shows the channel buster negative divergence in white and then trend confirmation in green, then a small positive divergence in white.

 Thus far the 1 min chart today has not confirmed USO's slight move higher.

 The 2 min chart has not confirmed either and is leading negative. We will have to see if this weakness continues and bleeds in to the 5 min chart which is currently in line with the trend or confirmation.

 Other then short term trades (which can certainly be profitable), the larger question is whether the trading range in USO in white that started a downtrend and then saw a breakout from that down trend, is still in effect. Or put another way, is the move outside the downtrend at the green arrow a shakeout of the downtrend or a new emerging trend?

We look to the 15 min chart for clues, the downtrend was confirmed at the green arrow and the breakout from it is currently in a relative negative divergence suggesting probabilities are that it was a shakeout move, however, I would like to see a stronger signal and movement to the 30 and 60 min charts before venturing a guess as to what this latest move is really all about.