(Click On Charts To Enlarge)
From October 30th entry:
"If that gap of one penny, at 53.93, gets filled, this is MUCH, MUCH less bullish than it appears to be at the moment, because it then would not be a Bullish Island Reversal."
Hourly Chart: The Bullish Island Reversal possibillity was negated, but there are some signs that the USO could rally a bit. It broke above a down trendline (red). That's not a breakout. It's a "break above." The trendline has such a severe slope that the USO would have "broken above" it even if it simply traded sideways for awhile. What is significant about this "break above" the trendline is that the USO came back and successfully retested the trendline, formed a Bullish Falling Wedge (pattern in yellow), broke out above that, then moved higher toward the recent highs.
The pattern in white is an Ascending Triangle, so we've got "nested patterns." A Bullish Falling Wedge, "nested" within the Ascending Triangle. A breakout would be above the Ascending Triangle highs of 56.85 and 56.71, which would put a target of roughly 62.87 IN PLAY if it breaks out.
Daily Chart: In addition to the Inverted Bullish Hammer and Bullish Hammer of Oct 27-28, the Oct. 31 candlestick is a Bullish Engulfing pattern. That's looking constructively bullish.
Note the Green "M's" on the Daily Chart, on Aug. 21, Sept. 22 and Oct. 31. On those dates, the MACD crossed its signal line. Often when that occurs we will hear, "The MACD gave a Buy Signal." No, it didn't. It simply crossed above its signal line. The technician must determine whether or not that's a "buy signal," not the indicator.
MACD Chart: "In a Bear Market, your 'Buy Signals' are SELLS." Not always. There is no always in the stock market. But, we can see that the first two MACD "Buy Signals" on Aug. 21 and Sept. 22 were exact highs in the USO. The first one came on a "dead cat bounce" off horizontal support (black line). The second one came at resistance at that horizontal line.
We'll see about this third MACD crossover, on Oct.31, but at least with this signal, the chart is looking constructively bullish with the three bullish candlestick patterns and the two "nested" bullish patterns in the Hourly Chart. The USO needs to break out of those patterns, above the 56.85-56.71 Ascending Triangle highs.
4 comments:
Hi Melf,
Nice analysis. On Friday I took small positions in UNG and SLV based on Elliott Wave Ending Diagonal (ED) patterns in both. I believe you would call these patterns bullish wedges.
Because Natural Gas and USO should track pretty closely, it's nice to read your analysis of USO.
If I am right about the ED breakouts of UNG and SLV, UNG would have a target of 36, maybe 40; SLV would have a target of 13 to 13.50.
I may have jumped the gun a bit on SLV, the pattern may not be complete. And because silver and gold generally move together, if silver's going up over the next few weeks, gold would have to, too. The gold chart is difficult to read one way or the other.
(I may have jumped the gun a bit on SLV, the pattern may not be complete)
Good Morning, Greg,
It looks like the SLV is trying to put in a little Inverse H&S: neckline 10.10 on Oct. 21 and 10.06 on Oct. 29.
It's skimpy in terms of width, though, and has to get through the high volume black candle of Oct. 10. It would look better if it went down to fill the 9.05 gap and put in a Right Shoulder, but the silver futures are up 4½% at the moment, so you just might get a nice pop here. I hope that you do ;)
Good luck!
Thanks, Melf. I'm kind of bucking the trend on both of these, but those Elliott Wave ED's are too tempting to walk away from.
Seems like gold, silver, and crude have all been tracking together, and recently have been in the direction of the stock indexes. I think we may have only one more day or so of up in the stocks, so it will be interesting to see what happens to gold, silver, and crude, if the stocks take a dive later this week.
Greg
(I'm kind of bucking the trend on both of these, but those Elliott Wave ED's are too tempting to walk away from).
Greg,
Yeah, I know what you mean, particularly when these sectors (and others) have been bludgeoned half to death. It's reasonable to look for signs of some kind of bottom, even if it's only for a bear market rally. I'd like to see the USO take out the 56.85-56.71 highs, though.
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