USO / DTO Update

This is more of a head's up for any tactical positioning you may want to do. The USO put I have open is August $38 and I think it will be fine, the DTO (2x short crude) equity long is meant for a longer term trending position than the Call position.

There should be a bounce in USO and Brent, it's nothing unusual or game changing, but I figured I can see it, I'll let you know and some of you might even want to use it to your advantage if you want to add to or start a new position in oil (short) of course we want to see the intraday charts go negative (distribution) on any bounce as confirmation and timing for new positions, but I'm not concerned about the trade idea, just a heads up on position management.

That said, oil does remain speculative with events on the ground in MENA.

USO represents WTI crude (West Texas Intermediate) whereas the CL futures below are Brent E-mini's, but the difference between Brent and WTI pricing has collapsed and they are about as close to each other as they have been for quite a while, in other words, I don''t think it effects the analysis by hopping from USO to CL.

 USO 5 min chart with a negative divergence right at the head-fake highs, note the scale of the head fake and the scale of the reversal, they tend to be proportionate. 

The 3 min chart shows the positive in USO better, but the 5 min chart shows the context better, yes there's a positive, but within a very normal (bounce) context.

 USO 10 min deeply leading negative at the head fake, look at how negative, how fast USO goes at the head fake or failed breakout, this is why these are so important for timing and great for entries, not to mention the much lower risk, but they are harder emotionally to enter as that is a new high for the period.

 USO 60 min has seen a sharp leading negative on a long term/important chart, no 5 min chart is going to turn this.

This is Brent futures, 15 min shows the positive within the context of a larger leading negative divergence.

Again, the high/head fake or failed breakout is where distribution picked up, if you read my head fake articles you know why.

 The CL 30 min chart, again any one buying the new breakout highs was left holding the bag, one of several reasons for head fake moves. The deep leading negative divergence and the positive divergences' size and scale within that should give a sense of context, thus I'm not concerned about the trade, it's just tactical.

The CL 4 hour chart, deep leading negative, this is one of a few reasons why I don't think any bounce in Crude is any danger and probably represents more of an opportunity than anything.