USO Follow Up...

The latest charts for USO look pretty good for the recent put positions and a swing move lower.

Right now USO is sitting right at the base's resistance, PERFECTLY.

 USO Daily chart and the base, price sitting perfectly at resistance with a small bodied Star yesterday (reversal/momentum loss/indecision candle) which is typically seen either at a loss of momentum in a move or at resistance. Today is another small bodied candle, a Doji Star, sitting almost perfectly inside yesterday's very small real body, a variant of a Harami reversal (bearish), although far from textbook. In western vernacular, we'd call it an "inside day".

 The 2 hour chart that shows strong distribution last summer at a H&S top price pattern and the 3C confirmation of the proceeding downtrend and then a huge leading positive divegrence at the lateral base. I'd say it's already large enough to support an upside intermediate term reversal, as far as a primary trend reversal, it may need a little more size.

The overall pattern is the "NEW" classic Double Bottom in which we see a head fake move below support, old "classic" double bottoms would fall just short of hitting support, but technical traders still follow those price patterns and when support is broken on the head fake shakeout, they are usually stopped out which is exactly why Wall St. does it, allowing them to pick up a boat-load of shares on the cheap, both important (on the cheap and more importantly being able to accumulate a large number of shares without setting of alarm bells or sending price higher against their accumulated position as normal demand of that size would trigger, but the stops being hit creates that supply without the upside that would normally occur accumulating so many shares at once.

The point is, the longer term trend long in USO is still very much intact, it's the shorter term swing that I'm looking at currently.

 This appears to be the reversal process in USO, it does make sense considering how large the uptrend was directly preceding this area, as usual, "V" shaped reversal events are pretty rare.

Remember the Saudis just showed increased record supply for March and their intention of increasing it to a new record high output this month and Iraq's southern oil fields are producing more bpd's on better weather, plus the monthly EIA report anticipating increased Saudi supply on the market, which they confirmed the very next day this week.

 The 1 min chart looks a bit like it's still in a choppy range like a reversal process, although this may have something to do with options expiration pinning, being the range the last 2-days is so narrow.

 The 3 min chart shows the timing timeframe and a negative divegrence right at resistance

The stronger 5 min chart shows the same with a leading negative divergence adding to the already apparent negative divegrence of earlier in the week.

 The 10 min chart shows the complete run from the base bottom with accumulation and distribution areas. Note how distribution has had a trend, although not very aggressive as price has moved to the top of the base, this makes sense as they are accumulating and may want to add more at lower prices, but aren't going to give up a lot of what they've accumulated at lower prices, just letting out enough supply to send prices back to the lower end of the accumulation range would be my interpretation with a more significant leading negative divegrence as shorter term swing traders seem to be getting out in anticipation of that move lower.

And finally a 60 min chart showing a clear negative divegrence.

It's hard to feel anything but good about the put positions with next month's expiration given these charts. I would normally be very nervous with such a nice base and sitting right at the breakout level. I do wonder about a possible bull trap head fake move above the base's resistance level which would serve to send prices down faster on the general head fake concept of "Failed price breakouts produce fast reversals".

I'll still be sticking with the 2 Put positions opened this week unless something material changes which I don't expect.