My Thoughts on USO (oil Etf)

[That One Guy 10]

I, took a look at the oil etf and came up with some ideas. I'm starting from the huge consolidation range in November. We see here at A, the market was balanced for quite sometime, and then the buyers came in and ran the USO to new highs by about $10. Now we consolidate again here at B, and this time for much less time before making new highs, about $9 this time. At C, we see even less consolidation, than previous times and now the market pushes up again this time making a new high, but only by about $6. So the buying pressure is there, but not as strong as before. Now at D we see a tight range, and it only last a few days compared to the previous congestion periods. The Uso makes another New high by about $6. Here is were it gets interesting. After the new highs seen after D, the market starts pushing back and the selling pressure starts coming in a bit more aggressive than before and the USO now pushes off its highs by about $10. We trade back into that little congestion zone in which selling dries up a bit and the market is then blasted off to E. At E we see a potential buying climax, which only lead to a new high by less $5. The market then chops around a few days and even test that climatic buying day, in which supply consumes the day, but volume is light, which some what suggesting the the buyers may be exhausted here. Also looking at the entire volume distribution from the begging of chop in November to now, we see the market is skewed to the downside. Price, however lingers up here above the peak volume price, which is the low probability breakout zone and with the stuff I outlined, I see increased odds for the market to start pushing back towards its pvp, and then maybe back to the Vwap. This is just my interpretation, and I would love to hear other opinions pointing out things, I missed.

Thanks for your time and take care.

[MC 10]

SUP buddy? Hope all is well with you.

I was bearish on USO with all that volume at the first high in the island. Here's a chart I did the night before it gapped up a 2nd time and then free fell all day.

 

 

Yesterdays volume profile was incredibly balanced. I'm finding that most times after such a tight balancing day the next direction chosen will have lots of emotion and movement so watch her today for some possible crazy moves.

 

There's that open gap down at just below $104 that could suck price down if the island is broken to the downside.

[james_gsx 16]

I had a similar discussion about this with a friend earlier. For some reason I don't like looking at USO instead of the CL contract... but I understand not everyone has access to the CL quotes.

 

But here is CL anyways. We have the nice "flag" (it doesn't really matter what you call it) followed by that huge WRB which appeared as a gap on USO. Since then we tested the .50% retracement levels and bounced back. Since then it's just been doji style moves every day but CL is still forming somewhat of a triangle within the WRB. While I don't think the trend for oil is done, I do think it has a good chance of falling down to the 50sma (green) and then rallying from there.

 

Personally I wouldn't short oil, because it can be so volatile I would rather wait for a more powerful signal to short. Triangles like this are hard to trade unless you get a breakout, if you entered now you might as well roll dice in a casino.

 

[ammo 10]

that is rallying on lower vol so it should fall,to place your bet you could buy the 110/100 put sprd in uso, your risk is defined and u could roll up to 115 if you were early or roll down to 105/95 if you are right,i assume they trade in 5 point strikes ,they may even have 1 point strikes

[MC 10]

I had a similar discussion about this with a friend earlier. For some reason I don't like looking at USO instead of the CL contract... but I understand not everyone has access to the CL quotes.

 

But here is CL anyways. We have the nice "flag" (it doesn't really matter what you call it) followed by that huge WRB which appeared as a gap on USO. Since then we tested the .50% retracement levels and bounced back. Since then it's just been doji style moves every day but CL is still forming somewhat of a triangle within the WRB. While I don't think the trend for oil is done, I do think it has a good chance of falling down to the 50sma (green) and then rallying from there.

 

Personally I wouldn't short oil, because it can be so volatile I would rather wait for a more powerful signal to short. Triangles like this are hard to trade

unless you get a breakout, if you entered now you might as well roll dice in a casino.

 

Nice post. I think it's very wise to be cautious on that flag within that monster WRB. JMHO I think brief consolidation on a heavy trender can be a good time to get optimum entries for either side as the WRB range should be tested out or close enough to it. Of course entry in the middle of the WRB is a gamble but the extremes are a wise play with a tight stop.

 

3 ways to play this setup could be...

 

1) Enter during consolidation near the WRB extremes. (highs for short, lows for long)

(most aggressive but most profit potential with a tight stop)

 

2) Wait for a breakout of the WRB range.

(2nd most aggressive trying to catch momo)

 

3) Wait for a pullback test at the WRB's breakout level to see if it holds up.

(Least aggressive also with a decent stop)

 

I prefer number 1 myself. I try to analyze the background and pick my side, get in at the WRB extreme and just set the stop. Getting in in the chop can be double edged sword though, especially on gaps. You could nail a gap in your favor but what if you're wrong and it gaps against you...it is a VERY aggressive trading style.

 

Number 2 is probably the most sound since it's momentum that moves price, and price action is what pays us as traders. Just be aware of fakeouts.

 

Number 3 is risky only in the sense that you could miss the move. There isn't always a test of the breakout level and it could sail away without you.