USO Trade Update

Here are the charts for the last USO update. I'm not including the /CL (Brent Crude futures), but there were signals there too.

Remember the original post was last week, Tuesday April 7th, USO Update as we saw a change in character from in line which USO had been since the previous update on MArch 31st, to showing a negative divegrence forming. That post was followed by USO Trade-Set-Up on Thursday April 9th and the open long position, Closing USO 1/2 Size Long Position was closed to retain small gains and prevent any downside risk, however USO was not quite where we wanted to see it at that point which was in the area of the 4/7-4/8 gap fill which USO hit today.

Here are the charts that led to the TRADE IDEA: USO SHORT (PUTS) just posted.

 The USO gap fill was not the specific target, although it was given as an area to set price alerts and an area expected to be filled and likely target. The actual signal for a USO short trade (although like GLD, the longer term perspective is that of a primary trend reversal to the upside as a large 2015 base seems to have good 3C accumulation/support for a trend reversal soon. In the meantime, I have expected a USO pullback, likely to the $16-00 area to broaden out and finish the base that has been under construction there since 2015 started. There are a lot of recent USO posts covering multiple timeframe analysis and the longer term perspective (long) with an upside reversal on either an intermediate or primary (Dow theory trend classification) upside reversal much like Gold.

Today's filling of the gap between the two red trendolines (yellow box) actually had NOTHING to do with the actual USO trade signal, it was coincidence and experience that our predicted area for a USO trade met with the right signals, it was not a price-based/target-based trade idea, it was a 3C chart based trade idea with the gap-fill as a probable area in which we might expect USO to move to before it was ready for a downside swing trade.

This is the USO 60 min chart. I had not updates USO until Tuesday April 7th since MArch 31st and the reason was that the 3C charts were perfectly in line with the price trend just as the market was last week with Index futures, thus we had no edge until the first divergence showed up last week when the April 7yh update was posted followed by a "Trade-Set-up" AS WE LET THE TRADE COME TO US ON OUR TERMS, AT OUR PRICE WITH CONFIRMATION OF OUR EXPECTATIONS.

Rather than chasing price like a flock of sheep, we set upo the USO trade expectations and let the trade come to us. As with any ambush HUNTER, PATIENCE is a prerequisite and one that we are often well compensated for.

As the 60 min chart shows, despite the longer term positives and base, it looks very much like USO/Crude oil, still was going to pullback just as we have very similar expectations for gold.

The 30 min chart which has more detail than the 60 min chart above this one, shows the "In line" or confirmation status at the green arrow.

This is an edge for us if we are already long or short a trade and 3C is telling us that the price action is confirmed and as long as we are on the right side of the trade, to remain there, however otherwise a divergence is our sharpest edge in a trade. This is the edge that only we have, normal retail technical indicators don't show the underlying trade action that 3C does as they are based on what PRICE HAS ALREADY DONE RATHER THAN WHAT IT IS MOST LIKELY TO DO.

 The USO 15 min chart is similar to the 60 min chart in showing negative divergences at the same two former highs, one which occurred today on the gap fill target that had been posted as a likely trade opening area (and one in which we should have price alerts set if you were interested in the trade idea).

 The 10 min chart confirms the same, at this point we have strong timeframes from 10 min. to 60 min all showing the same thing or "Multiple Timeframe Confirmation" as well as the Brent Crude futures showing "Multiple Asset Confirmation".

Intraday, the trend of the 1 min chart shows the last turn to the downside, which was also the same time I started updating USO again on Tuesday April 7 with USO Update as the 3C charts which were in near perfect price/trend confirmation had finally diverged.

Today's leading negative divergence as the gap-fill area was hit, is quite clear and jumps off the chart as I require of 3C divergences before deeming to be worth the risk.

We are still looking for a Swing downside target of approx. $16-$16.50 or so, but like GLD today, Closing down the GLD May $115 Putt Temporarily, if there's a reason to take gains off the table and a probability or re-entering the trade at a better price while preserving initial gains while adding to them on a subsequent better entry without having to lose any gains do to price movement or time decay, I'll post those alerts as well.

For now, I anticipate our downside target which has not changed since posted last week. Obviously a straight USO short or a 2-3x leveraged inverse ETF may be worth following a different strategy than option trades that can suffer greatly upon changes in price, volatility and time decay.

Best of luck!