Crude Oil

Hidden Pivot analysis tells us to expect lower crude oil prices, but the market might need to work off an oversold condition first.  On Wednesday the futures broke through the midpoint of a very elegant pattern which began at A=99.81.  We take this as a signal that the 'D' target of 84.99 is in play, but two things should give us pause: the pattern has unfolded quickly, and its BC retracement was only 33%.  There is another important pivot to bear in mind, the midpoint of a much larger pattern with A=107.15, yielding a midpoint at 86.57.  Both of our downside targets are below strong support in the area of two prominent prior lows around 87.50.  A tightly-stopped buy of the 84.99 pivot is not recommended, due to its proximity to the round $85 number and to its proximity to an important prior low at 84.91.  If the oil price continues to move up from here, we'll want to take a fresh look at the charts and view yesterday's low as a 'B' point.  (Posted by Doug “harry” McLagan)

We needn't join the panicked, confused and vexed trying to figure out what caused Monday's dive, since it left a guileless impulse leg on the hourly chart.  The midpoint support lies at 94.79, exactly 32 cents beneath yesterday's low.  That number should serve as a minimum downside target for the near term, but if it's breached by, oh, more than 25 cents, we should expect more weakness to the 'D' sibling at 92.36.  Use the 5-minute chart for camouflage if you attempt to get short -- but also for bottom-fishing at either 'p' or 'D'.  Keep in mind that even the most fetching patterns in this particular vehicle require a margin of error of at least 21 cents.  _______ UPDATE (September 20, 3:40 a.m.): The collapse from Friday's 100.42 high has gone far enough to give predictive form to the large, bearish pattern shown. It's p midpoint support lies at 85.94, and so we'll use that Hidden Pivot as our minimum downside objective for now.

The hourly chart leaves little doubt that this rally cycle will hit 104.93 over the near term. With $5 of upside potential from here, our trading bias should be aggressively bullish. However, if and when the 104.93 pivot is  reached, it will be a compelling spot to attempt getting short via camouflage. (We use this tactic here because, when trading crude oil futures in particular, even gorgeous patterns like the one shown need at least 21 cents of leeway relative to 'D' targets.)

The crude oil futures sliced through our midpoint pivot and formed a new bearish pattern to go with the one we have been watching.  Yesterday's 'D' target of 93.46 remains an attractive buy level, and the new pattern gives us another well-hidden pivot at 94.05 to consider.  The new midpoint of 94.86 has not been surpassed yet, but the futures have come within five cents of it more than once.  The lower 'D' target looks like a less risky place for an order-pair entered ahead of time.  Stops should be no higher than 93.39.  Traders inclined to buy the 94.05 target should probably not have orders entered beforehand and should watch the action for signs of a reversal before buying.  (Posted by Doug “harry” McLagan)

Crude oil made a new recovery high on Tuesday morning and now has confirmed downside targets of 95.00 and 93.46.  After making the high, the market sold off to below the 'X' point that activates a pattern, and the midpoint at 95.00 would be well-hidden if it weren't an exact multiple of five.  Oil bulls might want to watch the action around that level rather than working orders ahead of time, but a reversal at the midpoint should not come as surprise if it happens.  Below there, the 'D' target of 93.46 is well-hidden in every way and looks like a buy.  If the 'C' point of 96.54 is touched or surpassed beforehand, we should turn our attention to larger bullish patterns.  (Posted by Doug “harry” McLagan)

Crude oil plunged on Monday morning in response to a news item, and the extent of the follow-through, if any, will tell us a lot about the tone of the market.  The drop was sharply impulsive and came two trading days after a three-month high was set at 98.29.  After a retracement of part of the move, we now must watch for confirmation of a pattern at an 'X' point.  Follow-through to a 'D' target would suggest that last week's high was an important turn.  Bullish oil traders, however, should watch for a midpoint buying opportunity.  (Posted by Doug “harry” McLagan)

The chart is intended to refresh your memory concerning why crude remains a buy on weakness.  The target, basis the April futures, is 120.18, a Hidden Pivot that was first mentioned here in February as "magnetic."  That is still the case, as is the implication that prices are unlikely to reach those levels without a push from some geopolitical crisis -- presumably a pre-emptive strike against Iran.

Crude oil bounced off of a midpoint pivot that we noted here yesterday and now has some fresh downside targets to go with the ones that we've been watching.  The spiky trading of the last three weeks has given us a pattern- and target-rich chart, and a new pattern was confirmed on Tuesday with a midpoint at 105.94 and a sibling "D" target at 104.53.  Both of these pivots look buyable.  Still active are downside targets of 105.10 and 102.00.  Traders who shorted our 107.30 pivot yesterday with more than a five-tick stop were rewarded.  That midpoint's sibling "D" target at 109.23 is still active, but the futures do not seem to want to go there at the moment; it would be cancelled by a print at 105.38.  (Posted by Doug "harry" McLagan)

On Monday crude oil took a shot at our 105.10 midpoint pivot without quite getting there, and it might now be aiming back up toward a new pair of targets at 107.30 and 109.23.  The rally out of yesterday's 105.35 low confirmed the new bullish pattern, whose pivots are well hidden.  The larger bearish pattern noted yesterday will remain active so long as its "C" point of 108.20 is not revisited.  Both patterns are displayed on the attached chart, and they give traders a range of key levels to watch and possibly to trade.  The 107.30 midpoint is nearby but some of the other pivots might come into play if there is a strong move after the FOMC announcement this afternoon.  (Posted by Doug "harry" McLagan)