I’m charting the oil ETF USO again after I last charted USO at the end of May. I drew a few trend lines then and as our (those who eat and drive) bad luck would have it, the shorter trend line of higher lows held support. That same line is still holding and the price of oil looks like it still has room to climb. USO is also an optionable ETF making it an easier trade to make using less money.
The best part of the chart for oil bears is that USO (note that USO’s price does not equal the price of a barrel of light sweet crude, but moves in the same patterns) just hit a ceiling of higher highs that has offered a stopping point for the rise for the past month. That would lead us to believe that oil should drop some next week as it digests the run up that it had on Friday.
Oil bulls have a lot more ammo to support their argument for longer term upward price movement. USO just moved back above its 10 day moving average and its middle trend line that disregards the one to three day price swings below that mark. This is a harder line to track, but does show a solid trend in place for more of an average low than an absolute low. The longer term trend of higher highs is well above USO’s current price and that’s the line I think is going to be important. If this one month trend that I just mentioned breaks, the next ceiling to the top could be at that higher line which would put the price per barrel well above 150.
Trend lines don’t last forever, so at some point USO (and oil) will move closer to its 100 day moving average. The 100 day moving average is about 20% below USO’s current price and the two will eventually meet again as they did in February on the far left of this chart. The nagging question will remain, when?
i’m just tired of 4$ gal. gas!