USO’s corrective bounce off the 30.31 YTD low (09 Aug) within an upward channel indicated a bear flag and stalled at 34.89 (01 Sep high), just short of the formidable 35.14 shoulder resistance of the head-and-shoulder top pattern formed over the last 10 months. While the upper bounds of the channel near 35.14 caps, there is scope for a swing high ahead of a downside reversal. A break below the pre-gap low at 33.69 (Support 1) would expose 30.31 for a potential retest (Support 2). Additional weakness there would risk a deeper setback towards 25.50, the head-and-shoulder target (from 45.60/35.14, 02 May high/27 Jun low, Support 3). However, reclaiming 35.14 (Resistance 1) would negate the bear flag/head-and-shoulder patterns and shift the near-term focus higher. An upside break there would stage 37.33 (Resistance 2), near 50% retracement of the 45.60/30.31 ahead of 39.25 (Resistance 3) near 61.8% retracement.
Trading Indication: Short-term (Intraday):
Sell at 34.70 or higher;
Target at 30.31 and lower; Stop Loss at 35.20> (1.4.0%)
Long-term: Possibly buy lower
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