Like I said yesterday, USO has just been one of those trades we've been patient with because it's been setting up to be a worthwhile position, everything I'd want to see is there.
In last night's
Daily Wrap I said,
"While I think it's possible, even probable for a correction in USO/crude, I also think it's on the edge of a transition to stage 2 mark up."
Yesterday I also mentioned the momentum that would come as the head fake move is completed, overnight and regular hours today we are or have seen both.
This is the 5 min chart of Crude futures (Brent) and the red arrow on the timeline is the 4 pm EDT close yesterday, there was a slight pullback early this morning in to a positive divegrence and a nearly vertical liftoff as the head fake was complete.
This is one of several primary reasons head fake moves are so important and why we see them so often.
IF YOU HAVEN'T READ MY TWO ARTICLES, UNDERSTANDING THE HEAD FAKE MOVE (linked on the members' site) YOU ARE MISSING A HUGE PART OF THE PSYCHOLOGY OF THE MARKET AND HOW TO MAKE IT WORK FOR YOU.
This is the head fake move,
I've rarely seen oil overreact or barely react at all to events like Tunisia, Egypt or even Syria, but all of the sudden when there's a perfect bottom in , but no head fake, Iranians arresting two Saudi Fishing vessels creates a big gap down, I think it's clear the Iran/Saudi affair was cover for a shakeout, which are often good timing flags for a move to start, just look for yourself.
This is the 15 min chart, you can see the head fake to the right.
Here you can see the momentum off the head fake move and as $32.50 is crossed as warned yesterday, that was a good entry as well.
USO is very close to breaking out to stage 2 Mark-up, this is where we find what I call the "Easy money" or the trending aspect of the cycle.
I have thought for some time that we'd see at least $38.50, but I think I might be a bit conservative in that target.
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