USO Update

Interestingly, in front of this afternoon's API oil inventories (not to be confused with EIA's Wednesday 10:10 a.m. inventories), oil /USO have dipped despite bullish comments from the EIA overnight including a forecast that the build in inventories should end by mid-2015 and supplies should tighten substantially.

Nonetheless, USO looks like this as of right now.

USO breaking below an ascending triangle, bullish technical price pattern on a daily chart.

What is of notable interest is yesterday's USO Update with these excerpts as the Mass Psychology aspect of technical analysis is so predictable, we were able to forecast this move yesterday and Wall St. certainly knows it better than anyone...

"

 Intraday today (1 min ) USO, there's a negative leading divergence in place, a gap fill would be an obvious target based on this chart alone, but we have more.

Note the shape the consolidation is taking on, a bullish ascending triangle, which would be the right consolidation pattern for continued upside, however if technical traders are picking up on this too, look for a head fake move below the triangle, this would be a high probability / low risk entry in USO long for the next leg, but as with any pullback we'd want to confirm the accumulation of a head fake move.

If we saw a head fake move and I'm suspecting it more and more as this ascending triangle becomes more evident, than it should look something like this and the highest probability / lowest risk long entry would be in the head fake move's area.

The white arrow is the expected path from a technical analysis point of view, a breakout to the upside as the apex of the triangle closes, the yellow arrows would be the higher probability head fake, below the triangle where any stops would be placed and turn traders bearish on USO, followed by the accumulation of lower prices and an upside breakout, it's the move below the triangle we'd want to verify as being a head fake move and that would be the highest probability/lowest risk entry, all based on the predictability of Technical traders and how Wall Street uses that against them."

And thus far ahead of the inventories this afternoon, less than 24 hours after the post above, that is exactly what happened.

In a previous USO Update, this is the area I suspected USO would consolidate around...

This is our daily X-Over Screen and the area I thought a consolidation would take place would be around the 10-day yellow and 22-day blue moving averages, you can see we are a lot closer.

Right now there's no accumulation of the lower prices, but that's not too surprising this early, first they have to pullback to whatever the downside target area is.

However if we can confirm accumulation of lower prices in this area, this would be exactly the head fake move, high probability/low risk trade entery that was posted in yesterday's  USO Update.

Keep an eye peeled for updates if you are interested in USO / Crude long, there's still plenty of gas in the tank.