USO Update

USO was last covered in the Daily Wrap from Thursday Nov. 14th. Since that was a pretty long post, I'll just sip out the USO part and paste it below, under the dashed line (------) the post will pick up with today's charts.

Thursday, Nov 14...

USO is one I like and last I updated it I said I thought it had a little more lateral reversal process, I think it's pretty close to done- THIS IS NOT THE SAME AS THE ENERGY GROUP, it's a part of the group, but only a part.

 The long term 60 min set up from distribution to lower prices to accumulation and a bottoming process, I think USO can make it back inside the channel before heading lower.


The 15 min chart is going from in line to a clear positive divegrence and that lateral, wider reversal process I thought we should expect to see, but from here I think it's very close to a strong counter trend rally on the upside of course.
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Continuing from the present...

 This is what USO looked like as of Sept. 13 on a 60 min chart, the point here is just to show the accumulation, mark up and distribution process.

To the left there was accumulation (I should have gone further left to show more of the accumulation zone); the actual distribution started in the red square, but most heavily in the yellow square.

This is the current 60 min chart and has the best overall look at the trends from negative and falling out of the channel to price dropping significantly to a new bottom being carved out.

My suspicion is that USO will move back in to the channel and create a short squeeze as it starts to do so, essentially a big shakeout, but I don't think this is a new uptrend, but rather a strong counter trend rally (shakeout). Still, at this level, I see USO as low risk, high probability with good profit potential.

 The rounding bottom is the very same reversal process I mentioned in last week's analysis...

"USO is one I like and last I updated it I said I thought it had a little more lateral reversal process, I think it's pretty close to done-"

Essentially the positive divegrence on this 60 min timeframe is where the rounding process began. The reversal process (rather than a reversal event) is fairly large and mature and fits with the size of the positive divergence and fits with the expected upside move. The larger the base, the more support it can offer the upside trend, so I'm happy to see it.

As far as risk, a place can be placed just under recent lows (as long as it's not too close or obvious) and you still have an excellent entry and very low risk, especially compared to the reward.

This is an intraday trend that does a great job of showing where USO was "in line" with the downtrend and where it was positive/accumulation, it's the same as the 60 min chart, but when I see charts like this with beautiful confirmation and then they change character and price follows, they are just beautiful and I can't ignore them.

In any case, I still like USO here, I have some leverage on it with December calls, but I think I prefer a USO long or maybe a 2x leveraged long ETF.