Friday I posted on USO and my opinion was USO and Brent crude were both headed for upside. Today USO closed up +0.65% and 1.72% over the last 4 days. I was asked by a member today whether I'd add to USO right now (today) and my answer was, "No". At the time he asked (early today), USO was looking great, but my opinion was USO still needed a stronger base and it is there that I'd ass to USO.
(Please see Friday's post for the larger picture).
Lets take a look at the update because I think this can be a very lucrative trade, more so with a little leverage and I think a high probability, low entry with low risk is right around the corner.
I've been expecting a decent move in oil, this is Brent Futures 60 min leading positive.
USO 60 min is also leading positive. My initial target is back inside the channel, which would be quite a move, but oil showed good resiliency even in the face of a rising $USD today.
This is the very recent, very strong 30 min leading positive divegrence.
and to ge the timing kicked off, the 5 min chart joined them.
Earlier today when I was asked, USO was perfectly in line, but I still expected a wider base for a more powerful move, later in the day the 1 min chart made a move toward that direction.
The 3 min chart and even the 5 min to some degree all show the same, I believe it will be a constructive pullback that can be bought with an excellent entry and very low risk.
I drew basically what I envision from here in yellow, there could be a head fake move (yellow arrow), but it's not as common on short term commodity moves. Then I expect a breakout and move in to the channel around$39-$39.50 as an initial target.
A very sharp "V" like we have now would have trouble supporting such a move, but if it were to widen its base with a "WE" bottom, then it should have little trouble, you might want to set some price alerts.
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