USO Follow Up-Charts-GREAT HEAD FAKE EXAMPLES

USO does have a gap around the $35.40 area, not too far away, but I'm not convinced it hits it and even if it does, it can be played as a phased entry or even a full entry and that move wouldn't be so big as to create a lot of risk, just a caveat up front.

Here's quite a few interesting moves in USO which everyone should check out even if you have ZERO interest in trading USO, they are concepts that occur throughout the market on just about every time frame.

 Daily USO chart... At point "A" this is a bullish ascending triangle, this is one of those cases where traders can be subjective to torture the chart in to backing up their trade or view. An ascending triangle like this is a bullish consolidation/CONTINUATION pattern, that means it should follow an uptrend to be legitimate, but I've seen so many traders look at the pattern and forget the preceding trend because it wasn't convenient. In that case, technical traders expect USO to breakout to the upside (green arrow), but it didn't-it broke down pretty hard so we have head fake #1 which created a bear flag which is another consolidation/continuation pattern, this time a textbook example and traders expect it to break to the downside (red arrow), instead it breaks below on the open for 1 day and then trends higher and 3 days ago price gaps above the resistance area of the first triangle and in this area we see trouble brewing.

 The 15 min chart is more or less in line on the upside ever since the August negative divergence sending it lower, which also was a head fake breakout above resistance.

 However the more important 30 min chart never confirmed the most recent area of the move up, in fact it was not only negative at the August highs, but leading negative ever since it gapped above the triangle's resistance area.

 Here's more recent action on the 1 min chart which has been negative, but leading negative today.

 The 2 min chart accumulating and getting ready for the gap up and above longer term resistance and then a leading negative divergence at the gap up, it looks like we saw instant distribution on the gap up, the chart is leading negative right now.


 3 min chart has been negative, but today it's seeing migration from the 1 and 2 min charts and is leading negative as well.

Now the 5 min chart which has been in a weaker relative negative divergence is leading negative today as well, so there's action in underlying trade today in SO and it's not pretty.

I'm going to look at Energy as well as ERY/ERX too.

Think about those head fake moves, think about where they formed and what happened after, what they accomplished.