Now that oil prices have broken key support at $66.00/20 and have followed-through to $63.50 so far, let’s notice that today’s low represents a test of the rising 50-day moving average, which so far has contained the selling pressure.

However, let’s also notice that my daily RSI momentum gauge remains pointed sharply lower, which is a warning signal that we should expect oil prices to break the 50-day moving average and press lower towards $62.00 and possibly $60.00 thereafter. The February-July support line now resides at $55.16 in case oil prices find a reason to implode beneath $60. At this juncture, only a climb that sustains above $66.40 will argue that a near-term low has been established. One instrument we follow for playing oil’s downside is the PowerShares DB Double Short Oil ETN (NYSE: DTO), whose intermediate-term measured target zone remains 100-105.

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.