USO Update

A lot of you have been following the USO/Oil Set up and it has taken some time, but I think it's going to be well worth it. Last night oil futures opened down, when you see the charts it will be pretty obvious as to why if you don't already have an idea.

 This is the large view of the set up, I think USO can and probably will see a counter trend bounce back in to the channel.

It's interesting how closely this 10-day average has tracked USO, only 3 times was it off on the trend with price closing above early in the break when volatility is high, through the trend though  the 10-day held the entire trend as a stop, it was recently stopped out at the range and white arrow.

 All of the typical momentum indicators (using non-standard settings) are positively divergent at this range, which is most often associated with accumulation/distribution making it ironic that most traders view these ranges as a waste of time and dead action when point in fact, they have some of the heaviest underlying action.

 The set up from accumulation, confirmation of the uptrend and distribution in to the uptrend as I say over and over , "Smart money RARELY sells in to weakness or buys in to strength", the exact opposite, Thus Don Worden's admonition, "To make extraordinary gains in the market, you must know when to be CONTRARIAN", whether he knew what we see every day (I suspect he did) as to how smart money buys and sells, I'm not sure, but it's the clear reason why contrarian plays work and pay off the biggest.

 The 15 min in line and then in to accumulation at the range, a very specific, useful chart.

The 5 min chart doing the same. What is interesting is in to USO's pullback today, 3C is making a leading positive move.

Looking at the 3 min (small underlying action) you can see what the market was looking at, the Iran peace deal or whatever it's called. Strangely, USO has remain relatively unaffected through some of the worst MENA region conflicts like the Arab Spring, Syria in many extreme cases, Israel threats and bombing runs, etc. It seems oil is a lot more resilient than you'd assume.

 This is the 4 hour chart of Brent Futures, it looks just like the USO chart, the difference being one is an ETF, the other actual futures and one represents WTI crude while the above represents Brent, that's good signal confirmation.

And the 5 min chart shows the same thing as USO 3 min, some profit taking before the weekend deal, it seems to be over or close to it and oil has held the range.

I think so far so good and oil is in the end phase of it's accumulation period.