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USO Attempting to Breakout

Member @dpatel asked for my thoughts on USO (crude oil etf) in the trading room so here is my daily chart along with my thoughts. USO is currently challenging the March 18th reaction high. While on face value, a solid break above that level would be bullish, the negative divergences in place on the 60-minute through daily time frames could foil any breakout attempt, even if USO clears the 3/18 highs for several days. Longer-term the charts remain constructive but the near-term outlook is somewhat unclear to me at this time.

USO daily April 20th

USO daily April 20th

 

Should USO punch up above the March 18th reaction high with conviction, the potential does exist that the current divergences can be negated or burned through. If so, that would add to the intermediate & longer-term bullish case for crude oil. However, I'm fine just waiting to see how this one plays out from the sidelines (i.e.- I don't have any positions in USO or any WTI instruments other that some related energy stocks which are swing trade or longer-term positions).

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Apr 20, 2016 2:20pm|Categories: Gold & Commodities|Tags: , |2 Comments

2 Comments

  1. Gaucho April 20, 2016 2:49 pm at 2:49 pm

    Hi USO broke 10.80 max of 3/18. Let’s if it si with conviction,

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  2. GetItRiight April 20, 2016 3:27 pm at 3:27 pm

    There is always a rush at 2:30 when the pit closes, that’s why you will see probably the highest activity then. It looks like it broke through 10.80 just for those moments and is heading down now. I actually caught the top at 44.20 to average down on my DWTI. I still think this run up is overbought and fundamentals will come in play shortly.

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