USO – 3 Month Chart – April 28, 2009

I charted the large Oil ETF, USO, on April 28, 2009 while it was trading at 27.78 a little after 1:00 pm. 

• USO hit resistance two days at its trend line of lower highs
• USO has not traded above its 20 day moving average for more than two weeks
• USO briefly made it above its 10 and 50 day moving averages for the past two days intraday, but could not hold support there
• USO has used the $27.90 area as resistance or support more than 10 times over the past two months – Today it was resistance again
• USO has a short trend line of higher lows offering support

Opinion = The next few days could go in either direction for USO with trend lines supporting both directions.  The longer term trade gives limited downside risk and greater upside potential for USO.   The next true test of support could come with a retest of April 21st’s intraday low of $26.28.  If that line holds I think it would offer a great entry point.  (Disclosure:  I sold USO naked puts yesterday since I think the direction could even stay relatively flat for a few more weeks.)