Oil Chart – May 10, 2010 Pre-market

I charted the large, light sweet crude oil ETF, USO, before the markets opened today after it finished last week at $36.31.  Since oil has been trading without regard to any real fundamentals for a while I like using the chart to get a better idea of where it could be heading.  The chart shows USO is near the bottom of its trading range and should show support soon.  The $35 horizontal line has been the rough area of previous support, but it’s been lower.  That’s where the trend line of higher lows comes in.  That trend line shows potential support coming right about where USO ended on Friday.

I left the moving averages on this chart, but they aren’t playing a roll right now since USO just blew through all of them last week, but on the way back up they could offer short term speed bumps.  The Williams %R technical indicator is still in oversold for the 14 and 28 day periods.  Once it breaks out of that grey area is when I think we’ll have a better idea this is a buying opportunity.  For now, get your trade finger ready.  A good entry point could be just days away, if not today.