NYMEX Oil (USO) Should Take a Breather-- In the Absence of a New, Bullish Catalyst

One of the reasons I bailed out of my long United States Oil (USO) position yesterday was based on the behavior of nearby W&T Offshore Inc. (WTI) in relation to my channel work.

Let's notice that off of the April 5 pullback low, which itself was a coordinate at the lower-boundary line of the Feb-Mar price channel, Oil pivoted to the upside, and since has stair-stepped to test the upper-channel boundary in the vicinity of $48.25.

Maybe this time it will be different, but usually, the upper-channel boundary line (+/- 2%) will present serious resistance to the rising price action, and will stall, or even reverse, the upmove.

I have to go with the probabilities that some sort of negative price reaction against the upper boundary likely will emerge in the hours directly ahead.

Hence, the prudent approach is to reduce long exposure.

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