Psssst! Tomorrow's finally a better day to test oil's price for weakness

Okay, just among us, you know how I've been tracking oil, speculating on its path and levels, and admonishing yesterday it was too soon to short it? Well ... just perhaps it's about there now. I can count 5 waves completed to complete a fifth wave of the third rally leg up. (You remember, yesterday I said that it looked like it needed to get to $39.50 in USO - well that happened today.) So that's a start, but only one data point. It snagged another Fibonacci level on my daily chart, and also the 20-month exponential moving average (ema). I won't reiterate all the points I've been making about oil. I've borrowed one of Tony Caldaro's OEW charts, his $WTIC daily chart from his public charts at his Elliott Wave Lives On site (thanks Tony!). I remember he mentioned something about "good luck" getting past $70, and when you look at his chart there's a blue line there which probably means one of Tony's pivots. Based on his OEW count labeling, I'm guessing he would consider it bearish if oil prints a reversal pattern from this pivot.

As I noted on the USO hourly chart below, if you are the type to jump in early (which I cannot really recommend because that trading style can lose you money), then you could think about selling oil tomorrow if it moves under today's low and especially if it looks like it is closing under today's low. Then the logical place to put the stop, is at today's high ($40 in USO). The indicators haven't crossed bearishly yet, even in the hourly chart, so this is definitely a nervy idea! (That should be accompanied by an equally steely resolve to honor that stop.) The better thought for most people with most swing trading styles is to let it shake out for a few days and see if it confirms a trend reversal for pointing down.

The P&F chart still likes $87 for WTIC and therefore still supports those analyst predictions around $85, so I cannot recommend being complacent with this of course. The 50% retrace is at $90, so if it does get there and you're holding long at that point, it might be a good idea to pat yourself on the back and either TMAR or really tighten up those stops!