USO Update

Patience has paid off many times in the past, I think it will here too.

From the downtrend, in the yellow box we saw what Technical traders would consider a bearish consolidation/continuation pattern called a descending triangle. Some traders will short the price pattern, but many will wait for a break below the price pattern with expectations that a second leg down will start, roughly equal to the first leg down. However, THIS WAS A HEAD FAKE MOVE, as I often mention, 80% of all reversals see such a move just prior to the reversal and this happens on all timeframes. We could see this was a head fake move before it even broke down, I'll show you. The counter-trend rally retraced about 50% of the original move down on this chart, but volume is running dry. The recent 6-7 day range created an obvious resistance level, while the range itself only moved +0.03% over 6 days. The break above the range will bring some longs in on a break of resistance and open up USO a bit to some repositioning. Generally, in order to create income in trading, you (or they)  have to have someone to trade against, everyone on the same side of the boat makes them no money and when volume starts running dry, it's time to shake things up.

 This is the simplest chart of what happened above, a 4 hour chart reduces noise and smaller divergences and uncovers the larger trends. USO went negative at the top, saw downside confirmation (green arrow), then a head fake move at the triangle which is at the yellow box-*Note the accumulation in to the bearish price pattern and break below it, these shares were accumulated, there was mark up and trend confirmation and then they were distributed/shorted.

 The 60 min chart is more detailed, here's the head fake bearish triangle break down in yellow with a positive divergence meaning those shorts providing supply by selling, were having their shares accumulated, this is a head fake move or false break. After a period of mark up to make money on the shares, they are distributed in to higher prices, the divergence is sharper on the 60 min chart.

 The 30 min chart shows all the same themes at the same time, but gives additional details and is sharper as well.

 After mark-up, here's the 15 min chart with distribution in to the top, USO breaks above some resistance areas bringing in longs or demand, which can be sold in to or shorted as 3C drops to a leading negative low.

 So now to the short term charts for timing, I was waiting for this 1 min chart to go negative to fill out the position, you can see where it did to the right.

 The 2 min chart also went negative providing confirmation of the 1 min chart and showing the divergence is stronger than just a small move on a 1 min chart.


The 3 min chart also went negative, the same reasons apply as the 2 min.

The 5 min chart never moved up to confirm.