USO Update

 Going back through some history, at point "A" I was bearish on USO, there were numerous provocative actions taken by Iran during this time period and oil just couldn't gain on the event risk and 3C wasn't looking good at all, at point "B" we finally started to see some downtrending action. Just before  point "C", USO broke out above the channel, at the time the financial media said it was because of the Iranian situation, but the situation was much worse at point A than the breakout, this in my mind was a clear shakeout/head fake move as they tend to always occur before a major reversal in trend (major is relative to the timeframe) and as I expected and 3C was showing, it was a head fake move that  sucked in longs and created the downside momentum once the longs were trapped at a loss, you can think of that area before point "C" as a bear trap and you can see the momentum it created to the downside.

 Now there's a change in character in the price trend, as I have pointed out many times in the past, a bullish candlestick with a large volume spike often is a sign that the trend is about to change (as seen at the white arrow). Remember there are 3 trends, up, down and sideways.

 Looking at a 60 min chart, the price pattern is clear, it is a bearish descending triangle (consolidation/continuation pattern). Note the false break down at the yellow arrow that locked shorts in as they thought the downside trend was resuming. Technical traders will read this as a bearish price pattern and will short it, but as we so often see, technical price patterns that have a strong inherent bias such as a descending triangle (especially forming after a downtrend) often are manipulated or shaken out. I still think the bigger picture in USO is very bearish, but to help downside momentum in the primary trend, another upside head fake move like we saw on the daily chart above before point 'c' will help the primary trend's downside momentum. In the mean time, USO looks to be offering a speculative (because it is a counter trend move -potentially) long trade.

 The 60 min chart is leading positive, compare to the $USD below...

 The $USD is leading negative on the 60 min. and oil and the $USD have an inverse correlation, the $USD moves down and oil moves up or vice-versa. So the sub-intermediate trend (longer than a swing trade, but not a major move up) in 3C on both assets are in line with a move higher in oil, which is also in line with the manipulation of these common technical price patterns.

 The 5 min trend of USO, there are divergences, but I just wanted to focus on the overall trend, you can clearly see a change in character recently in 3C.

The strong had fake moves to the downside have all seen positive divergences. The point is, a strong move down creates selling on volume, which allows pros to pick up shares on the cheap and in size.

 Near term it looks like USO is getting ready, I wouldn't say it's a screaming long yet, but appears to be closer to a breakout above the bearish price pattern, it is likely waiting to see what will happen with the EUR/USD pair after the weekend. As we also commonly see, a downside move below the triangle with a 3C positive divergence (the head fake/momentum concept which applies to every timeframe), is quite likely, so if you see a move below the $31 area and are interested in the trade, you may want to email me to make sure there's accumulation in to the move, verifying it is a head fake move as this would offer the best entry. Otherwise, a break above the $31 area will be a shakeout move above the bearish triangle.

Here's the recent Trend Channel it shows $32.50 as a major change in character.