Yesterday we closed the USO put position opened Monday
Closing USO July 17th $20 Put Position to lock in gains of +45%,
USO Follow Up. Here's yesterday afternoon's
USO / Oil Analysis.
Today we have the bounce in the $USD (on the Jobs report) we had signals for, although I believe it to be very short term in nature, it pushed oil's earlier OPEC based gains back down when payrolls came out.
The daily chart is also looking a bit interesting... (Sorry for all the charts, but I want you to see what I'm seeing and my reasoning)...
We have expected this downtrend since USO crossed above its base's resistance, but showed distribution there and failed to follow through. I still expect USO will finish up a larger base and at some point soon we'll be looking at a long term trend long on an oil reversal.
For now today's daily chart is showing a Thrusting Candle(bullish), similar to an engulfing candle. Should it either engulf or remain the same with higher volume than yesterday, it will be an exceptionally strong candlestick reversal signal.
As we saw yesterday, USO's short term intraday charts are showing positive divergence and improving like this 2 min
Or 3 min positive
Even a 5 min leading positive suggesting a decent near term bounce, not large enough that I'd want to play it without some leverage though.
Ultimately the 15 min chart still shows USO has more downside to go once this bounce is over and as soon as the put position was closed yesterday, it was always my intention to re-open it at a better price a bit higher so I expect after this we'll be moving to a new put position on the downside until the base is finished.
As for Crude Oil Futures (CL/Brent)
The 5 min shows the same negative from earlier in the week that caused us to open the put position as well as the positive started yesterday and in to today.
Luckily oil, unlike stocks recently, still has some tradable volatility.
The CL 7 min chart also confirms.
As does the 10 min
And the 15 min chart.
As for the $USD which we expected to bounce today and it did as expected based on its signals.
Whether that means the Payrolls data was leaked or not I can't say, but it responded the way it should have on the Payrolls data and the divergence for a move higher was in place well before the Payrolls came out this morning.
5 min $USD shows the positive from yesterday and today's move, but there's no confirmation of today's upside, thus I don't believe it holds very long before heading back down, which helps USO/oil move higher.
This longer term 7 min chart was already positive and in place, the 5 min divergence which is faster to develop hasn't made it to the 7 min chart as of the time I captured these, but when it does, I'd expect the $USD to head lower and continue retreating from its counter trend rally that is now over.
The 7 min Euro chart shows a confirming divergence yesterday (negative) as the two move opposite (USD v Euro).
This is the trend we have forecasted in $USD since April 2nd when we called for a bounce which started its base to the far left at April 5th, we also called for that bounce to fail and a much larger downtrend to take over which occurred.
Shortly after we called for a large counter trend bounce/rally and a strong one as they usually are. the $USD made the strongest 7 day move in over 7 years at the long yellow arrow and we called the reversal to the downside which is well in place even with today's short term bounce. As the $USD moves lower, it should push crude higher.
This is the daily $USD chart I pointed out last night/yesterday with a bullish hammer reversal candle and today's gain, however these don't tell us anything about how long of a reversal.
This is the 4 hour chart of Crude futures with a large base almost fully formed for an upside reversal so while I see a near term bounce in crude, ultimately it should be heading back inside the base as the red signal to the right shows, finish up building the base and we should then have a viable reversal to the upside in oil.
For now, 1 bridge at a time.
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