Market Overview: Crude Oil Futures
The Crude oil futures market is in a 13-week trading range. Poor follow-through and reversals are more likely within a trading range. Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction. If the bears get follow-through selling next week, it will increase the odds of a retest of the December low.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bear bar with a small tail below.
- We said last week was not an ideal buy setup because Crude Oil was trading just under the 12-week trading range high, bear trend line and 20-week exponential moving average.
- This week traded slightly above last week’s high but reversed to close as a bear bar.
- The bulls want a failed breakout below the September low and the bull trend line.
- They hope that this week was simply a 50% pullback from last week’s rally and hope to get another leg higher.
- The bulls need to break far above the bear trend line, the 13-week trading range high and the 20-week exponential moving average to increase the odds of higher prices.
- The bears got a reversal down from a double top bear flag (Dec 1 and Jan 18) but failed to get follow-through selling.
- They want another leg down from a wedge pattern (Jan 3, Jan 18 and Feb 13) breaking below the December low.
- If Crude Oil trades higher, they want the market to stall around the trading range high and the 20-week exponential moving average.
- Since this week was a bear bar closing near its low, it is a sell signal bar for next week.
- The last 13 candlesticks are overlapping sideways. That means Crude Oil is in a trading range.
- Poor follow-through and reversals are more likely within a trading range.
- Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction.
- Crude Oil could be forming a trending trading range.
- Traders will see if the bears can create a follow-through bear bar next week. If they do, we may get another retest of the trading range low.
The Daily crude oil chart
- Crude Oil traded sideways around the 20-day exponential moving average and then broke below it on Friday closing as a big bear bar with a prominent tail below.
- Last week, we said that Crude Oil should continue to trade sideways, forming bull legs followed by bear legs.
- The bears got a reversal lower from a double top bear flag (Jan 3 and Jan 18) but were not able to get follow-through selling below the January 5 low.
- They hope that the current pullback (bounce) will stall around January high and form a wedge bear flag (Jan 3, Jan 18 and Feb 13).
- They want a retest and breakout below the December low forming the larger wedge pattern with the first two legs being September 26 and December 9.
- The bears hope that this week is the start of the bear leg within the trading range.
- They need to create follow-through selling next week to increase the odds of lower prices.
- The bulls want a failed breakout below the September – November trading range and the major bull trend line.
- They want a reversal higher from a wedge bottom (July 14, Sept 26 and Dec 9), a double bottom bull flag (Jan 5 and Feb 6) and a higher low major trend reversal.
- They hope that Friday was simply a deep pullback and want another leg up breaking above the 13-week trading range high.
- For now, Crude Oil is in a 13-week trading range.
- Until the bulls can break far above the top of the trading range and the bear trend line, the current move up could simply be a bull leg within a trading range.
- Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction.
- Markets have inertia and tend to continue to do what they have been doing. 80% of breakouts from trading range fail.
- Poor follow-through and reversals are more likely within a trading range.
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