I've been looking for a solid break below the $20.25, $20 area, I don't think an exact support area in this case is really relevant, there are quite a few things moving oil or rather not moving it as much as I'd like to see, but the general gist is I still expect a move lower in to the base area which is around the $16 to $20 area, then finish up some work it needs to do there, then it may very well be a decent looking longer term long/reversal of trend position. For now the USO equity short is in the money, the July 17th $20 puts are just a few percent from being green.
Yesterday as well as earlier in the week, I said I expected EUR/USD to come down, meaning $USD to move up which happened overnight. I warned yesterday that this is not so much a trade I'm interested in as it is an effect that it should have on $USD denominated assets, in particular, Oil, perhaps gold and even equities.
To me it looks like the $USD may see a short term intraday pullback, but the charts that have been in place for a $USD bounce (not huge one like the counter trend rally), are still in place which should pressure USO / Oil lower.
Here are the charts showing deterioration in USO near term as well as a possible trade set up on a gap fill which I'd set price alerts for if you are interested.
USO Daily is lingering right around the top of the base's range, it needs a break below the descending channel's upper and lower trendiness to get solidly back inside the base. Once there, it may become a whole different trade, a longer term long position on a primary basis which I suspect the F_E_D would love to get inflation moving.
This is the $USDX in purple and Crude futures in the candlesticks on a 1 min chart, you can see the inverse relationship so the $USDX's move up overnight sent oil lower. I suspect a short term correction in the $USD (down) which is already under way (based on 3C charts), this may set up a gap fill in USO, which is where I'd be setting price alerts as I will be and then I'll take a look, it may be a nice new short/add-to area.
I've shown the 3C charts which keep moving lower and every time USO pops above the descending channel, the divergences refuse to confirm and it pulls USO right back down, this is the 1 min.
The same has been true for the 2 min chart , but look at that leading negative divergence that has taken shape to the far right.
The 3 min chart, the same story with 3C trending lower and pops in USO shot down.
You can see why an intraday gap fill would be an attractive set up for a USO entry (short).
And the bigger picture charts suggesting a move back in to the base, the 10 min above and...
The 15 min are still suggesting USO will see downside back in to the base with more of a defined move and less of this chop.
This is the 1 min Crude futures intraday chart with a small positive divergence with the $USD showing a small negative divergence, thus the gap fill idea...
This morning's gap would be the area I;d set several price alerts as I will be doing and then I'll check it out for a decent entry, whether equity short or options.
The bigger picture near term 3 min chart is ugly like the USO charts.
The 10 min Crude futures chart is leading negative
As is the 15 min with sharper recent divergences lower like USO.
I'd set those price alerts if you are interested in the trade idea, I'll follow up if they are hit, otherwise I plan on leaving both the July 17th $20 puts in place as well as the USO equity short.
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