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USO Stop Hit, Divergences Still Intact

USO exceeded the suggested stop with a 60-minute candle close of 10.13 for a loss of 1.8% today. With bullish divergences still in place and the 10.15 support holding for most of today, USO might be added back as a new trade idea soon. The USO long/UWTI short trade will now be moved to the Completed Trades category but for those still in the trade or following crude, I posted the following comments earlier today in reply to a question on the USO trade:

The official entry for USO (or a UWTI short) was where it was trading when posted on Friday with the suggested stop being a 60-minute candlestick close below 10.15, which is the level USO is trading at as I type & if you look at a 1-minute period intraday chart, you’ll see that USO has been trading nearly flat on top of that key support level all day, helping to validate that level as an important & well watched technical level.

I’m going to keep the official stop as is, which means that it could be hit soon but I will also add that the 60-minute divergences are still in place so one could certainly go long here around USO 10.15 with stops maybe 2-3% below as I think that would still be a very objective long entry (or add-on to a starter/fractional position that was taken on Friday, which would thereby lower one’s cost basis & allow for a slightly lower stop calculated off the adjusted basis & preferred price target).

USO 60-minute July 25th

USO 60-minute July 25th

note: DWTI (3x bearish crude ETP) was listed under the Active Long Trades & now appears under the Completed Long Swing Trades as as short in DTWI was a net long trade on crude as when you short an inverse ETF, you are effectively placing a bullish bet on the underlying.

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Jul 25, 2016 4:37pm|Categories: Completed Trades - Long, Gold & Commodities|Tags: , |4 Comments

4 Comments

  1. upordown July 25, 2016 10:26 pm at 10:26 pm

    looking at cl..40 to 41 looks like good support..

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  2. roguetraderone July 30, 2016 7:12 pm at 7:12 pm

    Randy,

    Finally got around to doing an analysis on USO, at least from what I see if the reversal continues, it’s short lived to about about the 10.8 T1 on your chart. What I see (again, haven’t done this long) is that at about T1 there is a lot of resistance in that level including the 38.2 retracement from the last ascending triangle, the 200 ma, and the bear market line; these are all on the daily chart linked below. On the weekly chart, that cloud should provide resistance also at the T1 also. It just seems like way too may hurdles technically. Fundamentally, which I don’t subscribe to, this thing should just crash but interestingly as you noted in a previous USO post, just when the media fully switched to doom and gloom on oil, and even declared a bear market for oil, it had a good day. I don’t like going long when the weekly technicals are still pointing down so I might just wait for T1 and short there if it makes sense. Really appreciate all the videos and analysis such as the short interest levels on Friday. Not sure how I go about switching to premium membership but I’ll do that once I figure it out.

    rto

    Daily
    http://stockcharts.com/h-sc/ui?s=USO&p=D&b=5&g=0&id=p58523472250&a=470040157&listNum=1

    Weekly
    http://stockcharts.com/h-sc/ui?s=USO&p=W&b=5&g=0&id=p80129606239&a=470042181&listNum=1

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    • GetItRiight July 31, 2016 8:25 am at 8:25 am

      Nice analysis, makes sense. I am in the same position, bearish on fundamentals, which I believe in, just that I find out about them after the market movers, so I try not to overstay my welcome.
      I just sold my oil shorts on Friday on the reversal, but didn’t have the guts to hold an oil long through the weekend.
      I might play the bounce for a bit, but believe it will be short lived. I would rather go short on a good pop than keep a long position.

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      • roguetraderone July 31, 2016 9:29 am at 9:29 am

        GetitRiight, Ultimately I believe in fundamentals, just not for trading for the reason you noted. I shorted COP while watching WTIC, I should have shorted oil itself, I would have done better. But there will always be more opportunities. By the way, I believe technicals/prices eventually follow fundamentals but sometimes, it can take years apparently, if you haven’t seen it here is a hilarious video on all this government borrowing that should have resulted in a depression by now…

        https://www.youtube.com/watch?v=I5QwKEwo4Bc

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