Terrible inventory data has rocked the long side of crude oil this morning and the U.S. Oil Fund ETF (USO). The price structure has pressed beneath its rising 50-day moving average at $66.29 into the low $63.50 area so far, and could be heading for a test of its 4-month support line, now at $61.30. Although today's action certainly has the fundamental catalyst to continue lower, let's be aware that the prior correction from the June highs above $73.00 into the July 13th low at $58.32 represents a completed major correction.

With that in mind, I am mindful of the upleg from the corrective low at $58.32 to recovery rally peak at $68.99. Today's weakness has plunged prices to $64.00, which just happens to be the exact 50% retracement support plateau of the July upleg. If oil prices hold between $64 and $63 on a closing basis, then I have to consider that this weakness is a "minor, but violent" correction of the July upleg, or part of a larger, developing wide sideways, contracting range that has considerably more time, and directional swings ahead prior to either a new downleg or a new bull move.

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