Monday, May 24, 2010

Why I'll Be Watching Oil Tomorrow

Today was a quiet day in the oil market as can be seen in the above daily chart of USO. Notice the light volume today which is the lightest we've seen in days. The reason I'll be watching oil tomorrow is because USO made a double inside day. If you look at the above chart, you'll see that Friday's range was inside of Thursday's range and today's range was inside Friday's range.  Usually when you see such a pattern a breakout occurs shortly thereafter. 

I'll be watching USO tomorrow for a breakout of the inside day's range in anticipation of a large range trend day. One thing I'd like to add is that if USO gaps up or down significantly above or below today's range, that will negate the breakout trade. 

1 comment:

Anonymous said...

Did the opening action today count as down breakout from your pattern?
That would be bearish, right? I got stopped out from most of my energy positions this AM, except of UNG, but even that is very weak.


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