Oil is closing in on $40.00 and perhaps on the way to $37.50 amidst an increasingly acute oversold condition. The trendline created by connecting the two major rally peaks between September 2000 ($37.89) and February 2003 ($39.99) cuts across the price axis at 46.00-43.50.

As the chart shows, a sustained break of 43.50 points to the $37.50 area next. Where will it finally find that acutely oversold, extreme downside price level? I don't know, but my pattern work off of the July high at $147.27 warns that it is approaching fast, a potential opportunity for ETF traders of the US Oil Fund (AMEX: USO).

By Mike Paulenoff

Mike Paulenoff is author of the MPTrader.com (www.mptrader.com) , a real-time diary of Mike Paulenoff's trading ideas and technical chart analysis of Exchange Traded Funds (ETFs) that track equity indices, metals, energy commodities, currencies, Treasuries, and other markets. It is for traders with a 3-30 day time horizon, who use the service for guidance on both specific trades as well as general market direction

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Comments

clay
05 Dec 08, 18:53

oil

Hi Mike. thanks again for the analysis. I covered my oil etf bears and the shorts on etf oil bull today.. note oil was down 2+. whatever, but ery lost its 8 point gain this morning and started to even..divergence. fas, faz, skf and ugy kept wanting to act bulliish, so I went bullish on fnancials, and a little long on oil .. then the news on Hartford I saw later. But I used your points as a guide for the bounce. Thanks again. Clay

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