USO Update

Just so I touch on the bigger picture once in a while, I think there's a very good chance USO is forming a strong primary trend base that would be capable of sustaining a primary trend reversal to the upside since last summer's downtrend started. Thus the big picture, trend play that looks to be setting up is a strong primary trend reversal to the upside. For all of USO's/Oil's recent volatility, it hasn't left the base/range area, but ids sitting pretty high in it right now.

I suspect USO is going to make one more run down to about the $16-$16.50 level, but in the near term we've been waiting for a gap fill on what we first saw as a bounce off USO -5.20% 1-day decline and to use that area for a swing trade or perhaps an options trade, very similar in theme to the gold story.

As  quick refresher as to where I think the larger trade is and our current area/signals for the "next" trade, although a smaller one that I'd rather play with some leverage (we'll be jumping around timeframes a bit to see the multiple timeframe/trend analysis)...

 This is a long term 2 hour USO chart, I didn't draw on it too much and you've likely seen it several times. Note the clean and very clear leading negative divegrence ads price formed a H&S top-like price pattern last summer which led to a 3C confirmed downtrend to the $16 area where a new leading divegrence started, this time positive. This base is much too large in my opinion as is the divegrence for this to be a counter trend bounce, I suspect it's for a primary trend reversal back to the upside. What the actual catalyst will be, there are a lot of narratives that you could go with, but I couldn't begin to guess which.

Closer to home, we had a bounce in USO off those base lows and since it has such strong confirmation, until last week, the day before the 5-19% loss in USO, I had not updated it since 3/31, but as of last Tuesday, something had changed, we had a negative divegrence rather than the confirmation and the following day the -5.19% move lower.

The 10 min chart has gone from confirmation to an overall negative position which is the next trade I believe, a swing short like gold for a move to the lower end of its base, also like gold.

 The 15 min chart shows the exact same thing, from 3C confirmation to a negative divergence in the same place followed by the 5.19% 1-day drop and an overall leading negative position. This is an excellent timeframe for swing trade signals.

 And even the 60 min chart shows the same, confirmation which is near perfect, and the same negative at the same place. The gap created from the move lower the next day after our USO negative divergence post created a gap which is at the yellow area and the market has been ruthless about filling gaps.

Last week I proposed USO fill the gap and give us a second chance short opportunity for a swing like price decline toward the low end of the base. We were patient last week even on some upside moves, but they didn't approach the target of the original USO swing trade idea from last week, USO Trade-Set-Up.

However now it seems we are getting much closer.

The two minor swings to the upside last week off the lows we waited on as they weren't close enough to our target area and the signals were not giving confirmation for timing.

This 3 min chart is moving closer to the gap area as we saw this morning and starting to deteriorate, the gap would be the ideal area and I think we can probably afford to wait a bit more, I actually would rather miss the trade than get a sub-par entry, especially using options.

We don't have the strongest intraday signals for an upside reversal here to move back up toward the gap since this morning's gap up and decline, but we do have some intraday positive signals which is enough for me to be patient and see if we get the initial desired target entry. You may want to set some price alerts around the gap area just in case if you are interested.

As for Crude futures intraday 1 min...

 The intraday chart looks like there's a decent chance for an attempt to fill the gap.

USO's 1 min intraday chart doesn't look quite as strong, but it is positive at today's lows as well.