Yesterday's break in crude oil and downside follow-through from the 7-year trendline at $61.60 to new bear-market lows at $56.35 has accelerated into a new downleg that is pointed right for a test of the January 2007 low of $49.90 next. Such a decline represents another 12% on the downside, which should press weekly oil into relatively severe oversold territory for oil and its related US Oil Fund ETF (USO). Only a rally that sustains above $62.00 will begin to repair the technical damage inflicted during the past few sessions.



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.