USO/UCO update 09/26

Where’s oil heading we’ve heard many times over the past weeks, as it’s been rallying quite well. The chart below show the daily price movement for USO. Price broke above the trend line that connects the highs made in 2017 only, but is now bumping heads against the longer term trend line in place since the June 2016 price high, which I label as Primary IV.  Price did mange to close back above the 200d SMA, and the shorter term SMAs are pointing back up (20-50d), but the advance off the June low (yes it took 12 months from high to low….) is so far overlapping and counts best as an abc advance.

UCO

If price can break above the red down trendline, it could try to satisfy the c=a relationship and target $11-$11.20, which is strong S/R. If we look at the weekly chart of UCO, see below, we can still see price is in the blue down trend channel, and instead of an abc down, can be counted as an overlapping a,b,c,d,e down, with price now in wave-d, towards the upper blue trendlines. The RSI5 on the weekly chart is now over bought and the advance off the wave-c low sure looks overlapping, 3 wave like. As long as there’s no clear impulse up, the moves up are corrective. In addition the channel pattern is indicative of an ending diagonal pattern, which fits for a 5th wave. In this case Primary V of Cycle 1.

uso weekly

Only if price manages to break above $25 for UCO, will I have to change my POV in that Cycle 2 has bottomed. But don’t worry if you might feel left behind: there’s then still 30-40x upside potential left. So don’t worry about a few pennies if you can make dollars 😉 Until then, we’ll look lower first.