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The U.S. Oil Fund (AMEX: USO) is consolidating its recent gains, but is now showing signs of weakness.
Chart Courtesy of StockCharts.com
Oil traders look to be building positions with crude oil prices above $100, keeping USO near 80.
This is important technical action, as it suggests that positions are being added on the long side, at a slightly higher pace than they are being sold.
In fact, barring a reversal in this activity, it looks as if we're getting ready to rally higher in crude.
The trading range in USO has been between 69 and 80. That means that if we can break out decisively above 80, we could see this rally, if it materializes, taking us to 91.
USO is roughly 20 points below crude oil. That means that if the moves remain on par, we could see oil somewhere around $120 a barrel at some point in the future.
That's an interesting thought for sure, as it could have some rather surprising consequences, economically, on a trading basis, and in an election year, politically.
For now, we remain long on USO. Visit our energy section for details.
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