From a very big picture perspective, the most recent high at $111.70 in crude oil, tracked by the US Oil Fund ETF (USO), not only represents an all-time high, but also demarcates a major momentum non-confirmation of the upleg in oil from the prior pivot low at $86.00 in February. Over the years, weekly RSI "divergences" have led to significant and vicious corrections in oil, the most recent example of which occurred at the July 2006 high, which we notice clearly diverged from the April 2006 high. The momentum failure right now dwarfs the divergence in 2006 and warns me that once oil prices roll over, to expect a press below $80 relatively quickly. I think that decline is in its early stages.



Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.