Tag Archives: uso

Last Friday I posted on StockTwits a chart of a potential false break in crude oil ($CL_F) and that it might be hinting at higher oil prices. We then saw price begin to consolidate for  a few days before pushing higher by nearly 2% yesterday. This bullish move on Wednesday has sent oil to test previous support which has now become resistance.

I last mentioned this level back in December when we were seeing a small positive divergence in momentum which ultimately propelled $CL_F to test $100/barrel. However, crude was unable to maintain its strength and quickly fell back down to the low $90’s. Once again there is a slight positive divergence taking place in the Relative Strength Index (top panel of the chart) as it makes a higher low off an ‘oversold’ level while price tested the November low. At the time of this writing, crude prices are in the red for today and may take time to work through the supply brought about from this multi-year trend line.

I’ll be watching to see if price once again drops back to the January low or if the commodity can break the trend line as well as the 50-day moving average and fight its way back to $100. We’ll see what happens.

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Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

I’ve been watching crude oil ($CL_F) closely over the last month. In mid-November I highlighted the short-term channel that crude was in and the bias appeared to be for a break to the upside based on the positive divergences in momentum and volume. The price of a barrel of crude oil was also resting on the trend line support off the June ’12 and April ’13 lows. We saw a false break to the downside of the channel but support was still in tact. This is why patience and not having blinders on can be important in trading!

With the recent strong move in crude I thought it would be good to revisit the chart. As you can see below, we still have the positive move in the Relative Strength Index as well as a break of the short-term 20-day moving average. Two days ago I tweeted that we had an island candle pattern, which is typically bullish when occurring in an established down trend, taking place in oil as well as a strong confirmation.

Right now we are approaching the 50- and 200-day moving averages which could introduce a supply of selling that buyers will need to work through to see higher prices. The low-level of bullish sentiment I showed in a chart in November has improved but we still aren’t seeing a rush of bullishness into the oil market, which could mean there is still some room to run.

Things look constructive and if we are able to clear the two moving averages then a new up trend could be established. I’ll be watching to see where price takes us.

Don’t forget to vote for my blog for the TraderPlanet Star Award – Click here to vote!

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

Crude oil ($CL_F) has been on a slide for the last two months. In August and September I highlighted the breakdown that had been taking place, which eventually lead to 15+% drop in value for the Oil ETF ($USO).

Today I want to take another look at the price action in $USO and some of the bright spots that might be developing. First up we have the narrow trading range that $USO has been in for the last couple of weeks. However, this consolidation could be viewed as bearish by some traders, making the assumption crude oil bears are just catching their breath before starting the next leg lower.

While $USO has been flat with a slightly negative bias, we’ve seen a positive divergence created in the Relative Strength Index (RSI) indicator, which is in the top panel of the chart below. Momentum has been increasing while price has gone practically no where. I’d like to see the RSI indicator break above the down trend created off the July and August/September highs as a sign of strength to the upside. But the first sign we have is the positive divergence, it would be constructive if RSI worked its way back above 40, we’ll see what it does in the coming days/weeks.

On the bottom panel we have On Balance Volume. This indicator simply adds the volume on up days and subtracts volume on down days, attempting to give an idea of buying and selling pressure. This has also created a positive divergence as volume has been stronger on positive days than it has on days $USO has been in the red.

Looking at sentiment for crude oil ($CL_F) we have the Public Opinion data from SentimenTrader. As the chart below shows, there’s been a strong increase in bearishness for oil. Going back to 2009, the only previous time were sentiment was lower than it is today was in 2012. It appears no one wants to own oil right now, which is exactly what contrarians like to see.

One bearish argument that can be made for oil is based on seasonality, November isn’t a great month for oil. Since 1983, November has been the worst performing month seconded by October, which as we know, was also not a great month this year for crude.

Going forward I’ll be watching for a breakout of the current range in $USO. If we see a break to the upside, confirming what we is taking place momentum and volume, then maybe we’ll start seeing signs of a change in trend. As always, I like to see confirmation before my bias shifts, and there’s no exception here. We’ll see what happens.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

Sorry for the lack of posts in the last week, I’ve been staying pretty busy. Although apparently not as busy as Josh Brown and Phil Pearlman, props to both in their new endeavors. I wish Josh and Phil much success.

Today, via my TraderPlanet article, I want to take a look at the recent break down in crude oil ($CL_F).

Here’s a piece:

Well it seems the risk, for the time being, out of Syria has been diminished which has helped calm the oil market. While Syria only accounts for approximately 0.2% of the global oil production, any threat out of the Middle East tends to cause the oil market to spike. So does the resolution in Syria mean we are in for lower prices? Let’s see what the charts say….

The recent price action involves a momentum divergence, failed resistance and a breakdown of support. Put it all together and you have an interesting setup – sans any breaking news out of the Middle East.

Source: Is Oil Preparing To Head Lower? (TraderPlanet)

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.