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)
