USO Analysis: Oil Rally Points to Higher Targets

Amid the war in the Middle East, oil prices have broken to the upside, trading at their highest levels since June 2022. As a result, oil-traded ETFs are also at multi-month highs. So, what price action should traders expect for USO in the coming weeks?

USO (United States Oil Fund) is an exchange-traded fund (ETF) designed to track the daily price movements of West Texas Intermediate (WTI) crude oil. Instead of holding physical oil, the fund primarily invests in near-term WTI crude oil futures contracts traded on the NYMEX.

USO Monthly Elliott Wave Analysis and Forecast

USO completed a long term bearish cycle from July 2008 at the low of April 2020 identified as wave (II). There are two possibilities

1. The decline from the top of July 2008 is an impulse wave sequence starting from July 2008 and ended in April 2020. The entire decline could then be (I) of (a) and the resultant bounce from April 2020 is (II) or (b) targeting $380-$608 before wave III of (c) follows to fresh low. 
2. The entire decline from July 2008 is corrective and ending (II) with a new cycle (III) emerging targeting new record highs in the years to come. 

Meanwhile, the price action in oil suggests the second scenario is more probable. WTI rallied from the Covid lows with a strong 5-wave sequence, peaking in March 2022. Subsequently, a corrective pullback formed a 7-swing structure, bottoming in December 2025. The Middle-East war's escalation led to the biggest oil price gains since Covid.

On the USO monthly chart above, the price is in wave ((3)) of I of (III), which could target $181 or higher in the coming days.

USO Weekly Elliott Wave Analysis and Forecast

The weekly chart above shows the current sub-waves of ((3)). Price has completed waves 1 and 2 of (1) of ((3)). Wave 3 started from the low of April 2025 and is currently in its 3rd sub-wave, i.e., wave ((iii)) of 3, with a target likely to extend to 2.618 of wave ((i)) from ((ii)) at $127. Therefore, with this breakout, traders are not advised to sell. Conversely, traders are advised to buy the dips. Elliottwave-Forecast provides blue boxes for members to trade from.

Source: https://elliottwave-forecast.c...