Sunday, August 21, 2011

Oil Study

Looking at this sequence of the USO chart shows us some tradeable information.  First off the weekly is showing us a huge range, and within it, a smaller secondary range.  The two daily charts show, one a successful test of the secondary range last week, and zooming closer in we see a series of higher lows on price and stochastics, and a nice gap just above price.

My play is this, I opened a 25 option Sept 33 call position on the open on Friday, plan is to sell or scale out on the gap fill.  Then I will watch for a successful move above the next fib line or a failure of the range low for my next move with USO.

Market Sniper pointed out a trader post on playing ranges yesterday, and looking back at the weekly you can see a failure of the smaller range gives a high probability of a test to the 09 lows.

One mistake in my chart, the smaller range is the 10 lows, not the 09 lows, sorry.

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