CLH12

The crude oil market has a well-defined resistance area between 103.90 and 105.80, with a pair of hidden pivots just above there at 106.39 and 106.60.  The late-2011 decline to 74.95 was the biggest pullback in the oil price since its historic post-bubble low.  A very fast rebound from 74.95 to 103.37 has been followed by sideways consolidation.  A number of prior highs ranging from 103.90 (the grey "B" on the attached chart) to 105.80 (in May of last year) establishes a strong area of resistance.  Just above that range are hidden pivots at 106.39 and 106.60.  If the oil price can breach the 106.60 pivot decisively, we might infer that it is on its way to challenging the post-bubble high of 114.83.  That will leave the all-time high of 147.27 as the only upside milestone remaining to be surpassed.  Oil bulls should look for camouflaged buying opportunities.  (Posted by Doug "harry" McLagan)  _______ UPDATE (2:25 a.m. EST, Feb. 21): The pivots which correspond to the ones highlighted in this tout are at 106.64 and 106.72 for the April 2012 contract, which is now the front futures contract for crude oil.

Earlier, I'd suggested keeping a close eye on NYMEX crude, since price action in the futures is capable of alerting us in advance to the outbreak of war in the Middle East. The March contract has been creeping higher for the last week or so and settled above $100 a barrel yesterday, but it'll take more than that to hint of imminent panic. Specifically, we should use the 105.80 'external' peak shown as a bullish tripwire.  Anything less is likely to be just noise, although it would take but a 35-cent rally from current levels to turn the hourly chart bullish. It is already indicating 106.39 if and when the futures close for two consecutive days above 100.92, a Hidden Pivot midpoint

The news media have gotten revved up about a possible pre-emptive strike by Israel on Iran's A-bomb facilities, but if it were imminent crude would be warning us by moving higher rather than lower (just as it did, mysteriously, two months before the U.S. invasion of Iraq). So that we can tune out the hysterical noise, we'll want to keep close tabs on the March contract by setting a screen alert at 103, somewhat below December's high, to warn of an impending conflagration.  Incidentally, Rick's Picks subscribers receive real-time alerts about such things. Want to try a free trial subscription? Click here.

How odd that gasoline prices have fallen below $3 a gallon even as Iran's threat to close the Strait of Hormuz is turning crude quotes buoyant above $100.  The minor rally pattern projects to 105.46, and although energy prices have not been in the  headlines recently, they will be on everyone's mind if the target is breached and $11o becomes magnetic.

We've been using a 108.67 target for the December contract since, oh...forever, suffering the tedium of an intervening dirge that has not altered my bullish outlook. Shifting to the March futures, there's a lesser target at 102.34 that may not survive this hours-old pullback, since it is just shy of invalidating the point 'C' low at 97.37. However, if the pattern survives, refreshing the bullish energy of the hourly chart and puncturing a 102.47 midpoint , we could look for more immediate upside to its sibling 'D' target, 109.65.  In any event, prospects over the next few weeks look quite bullish to me based on the breach 12 days of ago of a 102.81 peak recorded in July.  Click here if you’d like to learn more about the Hidden Pivot Method, including how to identify and trade targets such as the ones given above, and to forecast trends with bold confidence.