TheTechnicalTake: USO (part 2)

Here is a daily chart of the United States Oil Fund (symbol: USO), and the reason to show this is because of the technical set up.  I have mentioned this set up several times in the past in numerous assets and across various time frames.  See figure 1.

Figure 1. USO/ daily

The black dots on the price bars represent key pivot points; these are the best areas of support and resistance that have been quantitatively derived.  The set up for higher prices is essentially a close below a key pivot followed by a close above a key pivot.  In essence, the close below a key pivot clears out the weak hands as support levels are broken and sell stops are hit.  Prices then reverse back through the key pivot leaving the majority of traders behind.  This happened at points 1 and 2 on the chart.

While we have yet to have a close below the key pivot point at 38.88, it would seem to me that today's gap below and then reversal back above the key pivot point may qualify as an intermediate term bottom.

Once again, I find this set up to be low risk and compelling.