Update on USO/Crude Oil and BGZ

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I showed this chart of USO (main ETF tracking oil prices) a few days back and suggested that the blue lines would be an approximate representation of the price pattern I expected to form. The updated chart is shown below. It appears that the "re-test" of the recent low has happened and prices are moving higher now.

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At this point, assuming the price pattern suggested is in force, price should move above the recent highs of 39.00. Based off the time of the first up leg off the Dec. lows, I would expect an upward move to last into late this week or early next week. At that point, an excellent shorting/put option buying opportunity should occur. The reason why is (assuming things play out as suggested here) that price should come all the way back down to the recent lows in just 1 or 2 weeks after the high. An ideal entry for the bearish trades would be on a move above 39.00 that forms a bearish candlestick after reaching one of the two pink lines on the chart above. Failure to breakout above those highs, would be classic topping patterns.

Tomorrow I will make a post suggesting placing 2 types of standing orders to potentially enter BGZ, as has been my focus over the last few weeks. Ideally, I would want to see a little more market upside to get hopes up and get in a bearish trade at a better price. But any break of last week's low in the market will likely lead to severe and persistent selling. Last week's low is the line in the sand and the edge of the cliff, so to speak. If a trade is not entered by that point, the opportunity for a relatively low risk entry (for bearish index trades) is likely to decrease quickly.

Pete