Member @wealthy requested an update on crude oil within the trading room. Following a very extended advance, USO (crude oil ETN) put in a divergent high on May 22nd, reversed from there & went on to break down below the primary uptrend line generated off the June 2017 lows. USO traded below the uptrend line for nearly 3 weeks before last Friday’s impulsive gap & rally back above the trendline where it has remained since.
USO daily chart June 26th
As of today, USO has backfilled the large & technical significant gap from May 25th, the top of which is a natural resistance level as with all gaps. Essentially, I have mixed thoughts on USO & don’t have any positions in crude or the energy stocks at this time.
The PPO signal line (9-ema), which does a good job of defining the trend as bullish when trading above the zero line & bearish when below, remains on a sell signal since crossing below the zero line earlier this month. However, the fact that USO has regained the trendline trading with 3 consecutive daily candles above it so far, provides mixed signals.
Due to the mixed bag of both potentially bullish & bearish technicals, my convictions on the near-term direction in crude are not very strong at this time although I favor a reversal & resumption of the recent downtrend from or near current levels. I will continue to monitor crude & pass along any new developments that stand out & as always, feel free to bump me for an update in the trading room at any time.