Crude oil is still in the lows today after yesterday's jump failed to hold and got sold immediately. Our update on crude remains the same and United States Oil (NYSE:USO) charts will be added to crude analysis.
USO Daily Chart - July 20, 2016
In this daily chart of USO, we see that the rally from all-time lows was made with 3 waves up, labelled as a-b-c or wave A. Crude and USO both corrected in a downward channel by failing to make another new high that would confirm a bullish 5-wave up structure.
Analyzing what we have for the moment, USO might fall towards the lower-bound of the channel, and that area will serve as a reversal zone considering the importance of the support.
In the above chart, we also see some "flags" that confirm the rally and others that alert us about possible divergence in price.
USO 1H Chart - July 20, 2016
In the 1H chart, we see that USO is retesting the 100% extension level for the third time and might try to test the lower-bound of the inner channel ($10.50).
With the inventories report ahead, we expect crude and USO to reverse and continue higher. In case of negative news, crude and USO might extend the move down towards the lower-bound of the purple channel.