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).
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