So you wanna short oil ... what's your time frame and how much can you afford to lose?

Oil has used the EIA data this morning as a way to push up a bit more, even since I was pulling these charts of USO to post. The hourly chart shows this at left, and you can see that there is no negative divergence in the StochRSI on this push higher today. That has got to be a clue that on the hourly charts, oil is still uptrending. So unless you are trying some intraday scalps, why are you trying to short it?! (And if you don't know what scalping is, just know that it's a way to very, very quickly daytrade normally contra-trend (sometimes considered with trend) and you've gotta either TMAR* your quick gain or stop out fast to avoid a loss expanding to a bigger loss.)

For most of us, why go in shorting oil unless and until the chart pattern and the indicators are saying it's downtrending? The daily chart below shows that there is negative divergence in StochRSI, with dropping volumes, but the lower indicators have NOT rolled over. So for swing trading it's too soon to short.

The pattern on the daily looks to me like it's working on a wave 5, and even the last small fifth of that 5. But given the dimensions, we cannot count that out without looking at the hourly. When you look at that hourly chart you can see that it didn't look like it finished that fifth to complete 5.

As I write this, USO is pushing up to 39.21. If that pattern in the hourly is a triangle, then it can be measured using the largest range in that tri, and then add the result to 37.10 to see what the "measured move" out of the tri points to. That would give you the target for a fifth-wave thrust out of it. That looks like roughly 39.50, although I'm not using a calculator for it. So if you let it get to 39.50 and then look for reversal indicators on short-term charts, then MAYBE you have something to work with.

The pattern looks a little off for a triangle, so don't count on this 100%. It can be, but the dimensions do not look classic so I remain a bit wary of that.

For those with longer time frames, which is most of us, the classic swing trade trigger never happens until the pattern looks complete and then there is a reversal day. Many of us thought that happened on 6/3 but then it pushed up again, indicating that was more likely a third and fourth wave of what I'm marking as the wave 5 on this part of the move.

I've already shown how this looks on daily charts with the Fibonacci levels and the monthly chart (use the "Oil" label to find those posts). So I can agree that there may be many looking for when this oil rally is done and ready to short. We'll see if the pattern completes out, and perhaps that will (finally) occur very soon. And of course, we will want to see those lower indicators on the daily chart cross down and tell us that the trend indeed is changing.

*TMAR = TAKE (the) MONEY AND RUN!