Buyers responded and sent the rebound back into the range. Here's hoping we get some buying on volume over the next week or so.
USO has been trading sideways since 10/28/09 with a downward bias. One thing I wrote in the 11/17/09 post, which I want to continue keeping in front of you is, �The price action is very choppy with overlapping waves. One thing I do want to point out is the fact that Oil has been in a corrective pattern since 2/9/09. That is a very long correction. Just remember that the main trend is still to the downside. We cannot get lost in the recent move and especially in what the media says.� I also want to remind you that the price continues to remain below the 233 EMA, which has been strong resistance in the past. I do not expect the price to back above the 233 EMA for a long time, from what I see right now. Another important fact is that the price continues to make lower lows and highs. I will remain bearish on Oil as long as this price action remains as the norm. A break of the 11/27/09 low will be a good sign that lower prices are ahead. A break below the 9/24/09 low will be major. The trend will definitely be showing signs of a change in trend by the time price reach that low. The only thing I see that would change my bearish stance is a break of the trend line connecting the highs from the 10/21/09 high. A break of that line, I will turn bullish and consider buying the bull Oil Funds.
USO fell hard today even though the US Dollar did not close up for the day. The price has found the up slopping trend line today and may cause a pause. How long it will pause here is the question. I believe the 34 level will be tested in the next week or so, if not the 32 level. Volume was relatively high today. The MACD and the Slow Stochastic are no where near the oversold area, which gives the price more room to the downside if it so chooses. The Slow Stochastic just broke through the 50% level today.
placed a trigger to buy 1000 uso at 35 and another 1000 and 34..what you guys think? looks oversold on a six month time frame
You are right that it is oversold short term and is due for a bounce. It may be today or it may be some day next week. When it does, I do expect a bounce to the 37 level, however, it has to clear 36.13 before it can test the 37 level. You may get a fill today on the 35.22 price and have a slight chance for the 34 Monday or Tuesday.
Looks oversold to me right now also, but I sold three days ago and rescind my LT bullish sentiment. Nice call earlier.
There is much to say about the EMAs for USO. We have already seen how resistant the 233 EMA has been and now it is again starting to decline. The 233 EMA is like turning a huge ship. It takes a lot of space to get it turned around. The other significant fact about the 233 EMA is that the 55 EMA is below it. This all indicates that the long-term trend is down and does not look like it will change anytime soon. There is more about the EMAs. The 13 EMA is below the 55 EMA and the 55 EMA is turning down, which indicates an expectation the price in the intermediate term is to move to the downside. Of course, the price is below it all, even though we can expect a retest of the 55 EMA. There are unfilled gaps that we formed in the first week of December. It would be no surprise if the price moved back up to fill those gaps. That would test the 55 EMA. The price does not have to move up from here, it could fall to lower lows. The MACD and the Slow Stochastic are not oversold right now. This gives the price room to move further to the downside before it takes a good pause. The sure fire sign that the downtrend is still in tact and is about to pick up steam will be a price break below the 9/25/09 low. That price level is definitely not as far from the current price as it once was a couple of weeks ago.
USO has retested the up slopping trend line and seems to have found good resistance because it firmly repelled the price. The price also made its way into the TAZ, but has since fall out of the area. We should see a challenge of the 34 level in the next couple of days.
OIH has potentially completed two consecutive waves one and two. I have labeled on the chart waves I and II with waves 1 and 2. The wave label up to wave 2 appears complete in my estimation and the downtrend should resume immediately. On a 60-minute chart, I can count a five-wave pattern down from the 12/28/09 high. This is the first sign that a turn is about to occur. The 12/28/09 high is the critical level that must hold if the downtrend is to resume immediately. What would be another confirmation that wave-3 of III has started? The first will be the break below the low of wave-b of 2. That would the low of 12/17/09. The next signal will be the break below the 12/8/09 low. That low is a bit far from the current price. If you want to nibble, I would consider shorting with the break below the low of 12/17/09. What about price targets for OIH? If you are follower of Elliott Wave, you already know that we potentially could be about to embark on wave 3 of III. That will be an intense move. It will be fast and it will be furious. My initial price target is 88, based on Fibonacci calculations and analysis. I multiplied the move of wave I to 1.618 and subtracted that from the bottom of wave I. Other target areas that could cause a pause in price is 105 and 98. You can trade this based on my recommendations mentioned above. If you are a little more aggressive, you can short now with a stop loss just above the 12/28/09 high.
Last update: 12/30/09 <b>Where did we come from?</b> USO has bounced up from the trend line shown on the chart. I will have to admit that I have had difficulty in analyzing this chart. The price did drop as I anticipated in earlier updates; however, I did not anticipate the bounce we have seen on the chart. USO continues to trade below the 233 EMA and a trend line drawn from the 10/21/09 high. I have to remind myself that oil is in a counter trend correction by constantly looking at the weekly chart. However, it is very frustrating from a day-to-day basis. Therefore, with an intelligent guess, what can I garner from the information that we have? The bounce from the 12/11/09 low has not been any easier to figure out using Elliott Wave analysis. I can potentially count a wave 1, 2, and 3 up, indicating higher prices. However, it could be corrective and the count could be waves a, b, and c, indicating lower prices. One critical level for lower prices is the wave-b low of 12/22/09. A drop below that level will signal that the bounce from the 12/11/09 low was corrective. I will have to re-evaluate the chart again if the price moves higher the next couple of days. One significant resistance is the trend line mentioned above. We will have to wait and see how the price reacts with that resistance. We will also have to keep an eye on the 233 EMA, which has proven to be significant resistance to this point. The next couple of days will be critical for the understanding of which way USO is heading. As I mentioned above, the 12/22/09 low is the critical level to watch. A break below that level should usher in lower prices.