What would it take to bring the price of oil down to $75 barrel? How about the completion of a bearish chart pattern such as the one imagined in the chart below? We can just hear Brian Williams on the evening news six months from now, introducing technical analysis to the masses: 'The price of crude oil fell sharply again today, hitting $75 a barrel ' the lowest it's been in nearly a year. Experts attributed the drop to the completion of a bearish head-and-shoulders pattern and predicted that if it breaks the neckline, prices could fall to as low as $68 over the next seven to ten days.' We're joking, of course. Even so, we thought it might be useful to visualize a bearish price scenario that is likely to be far from the minds of the news anchors and pundits in the days and weeks ahead. Admittedly, if you take away the imaginary red bars on the chart and focus on the actual price surge represented by the blue bars, it's hard to believe oil prices are going anywhere but up from here. Even by our own technical runes, a thrust over the next 3-4 weeks to as high as $116 cannot be ruled out, especially if quotes settle above a 'Hidden Pivot' resistance at $101. Global Downturn However, it's also possible this headline-grabbing rally is the blow-off that will cap oil's price for a long time to come. Fortunately, we won't have to speculate on whether an important top is at hand, since the power and resiliency of the rally will be manifest on the intraday charts. Specifically, if significantly higher prices are coming, we should see bullish Hidden Pivot patterns reach or exceed their rally targets on the hourly chart while corrective patterns fail to do the same. Hidden
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