USO charts

To best understand the USO set-up and positioning, see yesterday's USO Update.

What we always want to see in to a pullback trade is a constructive pullback, meaning that we see some positive divergences in to the pull back. We also want to see a proportional reversal process. USO has spent most of its consolidation, consolidating through time which is fine, but we also expected a pullback to run along our 10/22 day moving average X-Over screen. Had you followed Cramer, you'd likely have bought on the exact day USO topped and started its consolidation. I personally think Cramer is a lot smarter than that.

Remember the EIA Petroleum report is due out at 10:30 a.m. tomorrow.

 The Daily USO chart and it's pullback not only toward our target area of the two moving averages, but the break below the triangle forecasted yesterday.

Ideally tomorrow's closing candle would be a Doji star or bullish hammer on increasing volume, ideally...

 Here's the pullback//distribution in to today from yesterday's intraday highs which also put in a small head fake move, as usual, just before the downside reversal.

Note the positive intraday divergence since the pullback today. If the divergence is strong enough it will migrate to longer timeframes.

The 2 min chart also shows the distribution for today's pullback at yesterday's intraday highs or a mini head fake move which was a perfect timing marker for the downside reversal as head fake moves almost always are.

 We have the same distribution yesterday, pullback and leading positive today on a 3 min chart so the process of migration of the divergence shows the USO divergence (positive) is gaining strength.

 We are even out to the 5 min chart on today's pullback, once again yesterday's negative at the intraday highs is clearly visible,  but this pullback was entirely based on the concepts of using technical price patterns against traders or head fake moves.

 The Brent Crude futures are also positive intraday 1 m

As well as their 5 min charts and...

The 10 min chart showing the same distribution in to yesterday's small head fake highs and the same stronger/migrating positive divegrence through today.

Ideally the base would be a little wider, that's why I'd like to see a Doji star or a bullish hammer at the 10/22 day moving averages on tomorrow's close, but we have to take what the market gives us and so far, it is what we had forecasted days ago and more specifically yesterday.