More on Crude / USO

As mentioned in the last $USD update, I expect crude to continue lower on what is actually a pullback in to a much larger base range...

 USO daily chart which we have covered since the downtrend from last summer's top started to show accumulation. Now we have a fairly decent size base (white) from which oil should be able to eventually put in a solid upside trend reversal. The March head fake / stop run gave USO the momentum it needed on a short squeeze (initially) to break through base resistance, but there has been no follow through and 3C distribution which is why we have expected the break above the range to also be a head fake move (false breakout) and to pullback within the range, creating a stronger base so long as there's accumulation of the pullback.

For now, the trade has been USO short on the pullback in to the range.

 Last week we did see this bounce in USO, which was characterized as a normal corrective move within the pullback channel as you can see. There was also a quick head fake / stop-run just before that move started with a break below support of the channel, creating a small bear trap for last week's bounce which I have not expected to hold and to see further downside.

 This is the larger picture on a 4 hour 3C USO chart showing the breakout of the base area with a negative divergence rather than confirmation which is why we have expected this particular move to fail and head lower as it has recently been doing (channel above trending lower),

Overall the base has a strong positive divergence, but it looks like it needs a bit more work before it's ready to make a solid breakout and trend reversal to the upside that will hold.

 This USO 15 min chart shows more detail exactly where USO broke out above the base's resistance area and the negative divergences that occurred at the same time telling us it was likely a head fake move and would not hold.

The shorter term charts showing last week's move or bounce within the channel (this is the top of that bounce within the channel) on a 1 min chart suggests our opinion that the move was simply a corrective one and would see further downside appears to have solid confirmation on numerous short term charts such as this 1 min negative divergence.

As well as the 3 min chart showing the entire corrective move within the pullback channel from last week, leading negative divergence.

 And the stronger 5 min $USO chart and the bounce last week with a clear leading negative divergence.

For the big picture trending long in oil we'd eventually like to enter, at some point we want to see this pullback accumulated telling us it is a constructive pullback and cheaper prices are being accumulated as they have been this entire year thus far (2015).

Oil (Brent) Futures show the same near term activity...

 /CL Oil Futures 10 min with the channel down and last week's corrective bounce and negative divergence at channel resistance as seen above.

 The 7 min chart showing the same

And the 5 min chart.

USO shorts should still have some decent gains in them and the reversal process to build the trending long I eventually expect, will likely take at least a few weeks. By then, we should have very strong 3C signals confirming that the pullback has been accumulated and we'd start looking for the next trade, a longer term trending reversal to the upside (long).