These two posts are from yesterday, USO Trade-Set-Up which lays out an outline or recap of the idea which originally came Tuesday when USO finally saw a 3C divergence as it had been trading nearly perfectly in line until this week, price weakness followed the very next day after our post that we'd be seeing USO weakness with a strong move of -5.19% on Wednesday, that post from Tuesday dealing with the broader aspect of the USO swing trade short set up can be found here, USO Update. Previous to this post, the last USO Update was 3/31 as the 3C charts had been trading in line with USO ever since or at least until this week's post suggesting we'd see some downside.
Yesterday's final post for USO (not including the Daily Wrap), was a quick update, Quick USO Update in which a similar situation to GLD's was quickly updated with the following...
As for today's update as USO is +1.55% higher today as expected...(these look to make for some decent little short term leveraged option trades, the key being short term)...
The original bounce idea this week after Wednesday's 5/19% decline was not based on a dead cat bounce due to the sharp drop forecasted Tuesday, it was because of the 3C charts. Our original target in which I was looking for price to hit to close a 1/2 size long position entered a while back at a small gain and likely enter or for some, add to short Swing trade positions entered Tuesday before Wednesday's -5.19% decline was and still is the gap area from Wednesday's decline; this is why no USO position/trade was put out on yesterday's gains, although they were better pricing, they were not the target area and we still had/have signals suggesting we hit that gap target area. This is a great example of how these short term trades (likely needing the leverage of leveraged ETFs or options) can work as anything much longer than a day or two here and there has frustrated traders over the last month or so with increasing frequency as the market's range has pinched even tighter in to the general triangle shape we posted last week and was a big part of this week's forecast for price action. Very short term trades like a quick short on Tuesday closed Wednesday or a long Wednesday closed in to yesterday's intraday highs or today's continued move (I believe) are examples of just how nimble you need to be, but otherwise the signals as you already saw in GLD are very accurate.
This is where knowing what kind of trader you are or what your lifestyle will allow is very important. I may be able to find the 5 extra minutes in my day to enter the trade, in a normal 12 hour day with my busiest part during the 6.5 hours the market is open,I'd be lucky to find the 5 extra minutes to enter the trade, THAT'S NOT WHAT CONCERNS ME, it's the half day or whole day I'd need to spend checking in on the asset to see where I need to exit that I simply don't have time for personally, which is why I choose to wait for the larger trade set-ups that are at least swing trade in nature, that I can find ample time to determine when I need to be looking at getting out of the trade. In my situation with what I do, it's not getting in that I don't have time for, it's managing and getting out. You have to consider what you have time for, what your trading strengths are, what your risk tolerance is. There's always a trade out there, but it doesn't mean it's well suited to your personal situation. Thus, I'd rather trade the larger swings with higher probabilities and easier set-ups and management.
As to today's updated charts, I'll try to give a broad overview and include multiple asset analysis as well as multiple timeframe analysis.
Note the yellow arrow denotes (as usual) a head fake move/stop run which is one of the best price pattern based signals we have that must be confirmed by 3C. In this case, the run on stops took place at the yellow arrow's head fake move, accumulated the stops at lower prices and then ran to the upside. This is the nature of a head fake move whether creating a bear trap as in this case which gives the upside move more momentum as shorts who entered on the break of support are squeezed and forced to cover (changing the supply/demand dynamic and sending prices higher/faster as well as allowing smart money to pick up some last minute shares on the cheap as short selling is still selling and smart money is accumulating those shares on the cheap) or whether an upside head fake creating a bull trap just before a downside move, forcing new longs who entered on something like the breakout of our current triangles, (again altering supply / demand dynamics, allowing smart money to short in to higher prices as they are selling to retail who's buying the breakout, causing retail to stop out as prices move lower and create more downside momentum THIS IS WHY HEAD FAKE MOVES ARE SO IMPORTANT TO OUR ENTRIES/TRADES/TIMING AND WHY VERIFYING THEM IS SO IMPORTANT) to sell as price moves lower creating a downside snowball effect of supply and lower prices. It's actually ingenious and all based on the predictability of technical retail traders.
This is multiple asset confirmation as USO represent WTI crude and /CL represents Brent Crude FUTURES , yet they have the exact same signal in two different assets that trade at different premiums to each other.
The recent USO post this Tuesday linked above as 3C finally broke from confirmation giving us a negative divegrence and the first strong edge for a trade which was a 1-day -5.19% move in USO.
The the positive divergence on short term charts around mid-week which became part of a larger trade set up as we let price come to us for a second chance trade opportunity and the ability to confirm our suspicions.
Yesterday's bounce was a better entry, although not any where near our original expectations of up to a gap fill, creating a much better entry. Thus it should be very clear today why patience is so important as rushing in to the trade yesterday would have just put you at a loss today which is at least dead money and opportunity cost short term, perhaps draw down or even the difference between an options trade that works and one that doesn't if you use near term expirations.
And on a 15 min USO chart Tuesday's post at USO bounce highs and the slide by over 5% the next day as expected Tuesday , in yellow the gap fill area and the area I'd like to see price move to before entering a ?USO swing short. Remember the longer term USO charts are suggesting a primary trend reversal to the upside so any near term entry in USO short would be for a swing move toward the $16-$16.50 target level.
I'll update this as best as I can as we move toward a better set up. Again either VERY nimble, leveraged trading is required or patience and letting the trade come to you which is always my preference for the wold pack, to ambush the trade on our terms, our turf and you can always pass and wait for the next trade rather than accept a sub-par trade.
Again, almost all of the wisdom and quotes of Jesse Livermore of the early 20th century, trading during the 1929 crash and widely considered the best trader of all time all revolve around one theme and that is PATIENCE.
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