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Crude Oil Overlapping Candlesticks

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Market Overview: Crude Oil Futures

Traders see Crude Oil Overlapping Candlesticks on the weekly chart which means the market is forming a tight trading range. The bulls will need to create sustained follow-through buying above the 20-day EMA and the bear trend line to increase the odds of the bull leg beginning. If the market trades higher, the bears want a reversal from a wedge bear flag.

Crude oil futures

The Weekly crude oil chart

Crude Oil Weekly: No FT for Bears, Tight Trading Range, Crude Oil Overlapping Candlesticks
  • This week’s candlestick on the weekly Crude Oil chart was a big bull bar closing near its high.
  • Last week, we said that the sideways to up pullback likely has ended and odds slightly favor the market to form a second leg sideways to down. However, the renewed conflict in Syria, Iraq and Iran over the weekend can cause energy prices to be volatile especially if it escalates.
  • The market traded slightly lower early in the week but the bears were not able to get follow-through selling.
  • This week’s candlestick overlaps with last week’s range. This is consistent with the hallmark of a tight trading range.
  • The bulls see the selloff to the December 13 low simply as a bear leg within a trading range.
  • They want a reversal from a higher low major trend reversal (Dec 13), a wedge bull flag (Oct 6, Nov 16, and Dec 13) and a small double bottom bull flag (Jan 13 and Feb 5).
  • The bulls will need to create sustained follow-through buying above the 20-day EMA and the bear trend line to increase the odds of the bull leg beginning.
  • The bears see the recent sideways to up pullback simply as a two-legged pullback and want the 20-week EMA and the bear trend line to act as resistance, forming a double top bear flag (Dec 26 and Jan 29).
  • If the market trades higher, they want a reversal from a wedge bear flag.
  • They want another leg down to retest the prior leg low (Dec 13) and the trading range low (May low).
  • Since this week’s candlestick is a big bull bar closing near its high, it is a buy signal bar for next week.
  • For now, the market may still be in the sideways to up pullback phase.
  • It is also in a tight trading range (sideways overlapping candlesticks). Poor follow-through and reversals are the hallmarks of a tight trading range.
  • Traders will see if the bulls can create a follow-through bull bar following this week’s close above the 20-week EMA. 
  • Crude Oil is currently in a 79-week trading range. Traders will BLSH (Buy Low, Sell High) until there is a breakout with sustained follow-through buying/selling from either direction.
  • The market is trading in the lower third of the trading range which is the buy zone of trading range traders. 

The Daily crude oil chart

Crude Oil Daily: Still Sideways to up Pullback
  • Crude Oil traded sideways to up for the week.
  • Previously, we said if the bulls can get a series of consecutive bull bars closing near their highs, trading far above the 20-day EMA and the bear trend line, it can swing the odds in favor of the bull leg beginning. 
  • So far, the market remains in a sideways trading range around a flat 20-day EMA.
  • The bulls see the move down to December 13 simply as a bear leg within a trading range.
  • They want a reversal from a wedge pattern (Oct 6, Nov 16, and Dec 13) and a double bottom bull flag (Dec 13 and Feb 5).
  • They hope to get a retest of the January high followed by the beginning of the bull leg to retest the September high.
  • The bulls will need to create consecutive bull bars closing near their highs, trading far above the January high to increase the odds of the bull leg beginning.
  • The bear sees the current pullback as forming a wedge bear flag with the first two legs being December 26 and January 26.
  • They want a retest of the December low after the current pullback.
  • For now, odds slightly favor the market to still be in the minor pullback (sideways to up) phase.
  • Traders will see if the bulls can create sustained follow-through buying or will the market stall around the January high area.
  • If the bulls can get a series of consecutive bull bars closing near their highs, trading far above January high, it can swing the odds in favor of the bull leg beginning. 
  • Crude Oil remains in a 79-week trading range. Traders will BLSH (Buy Low, Sell High) in trading ranges until there is a breakout with sustained follow-through buying/selling.
  • Most breakouts from a trading range fail 80% of the time. Odds slightly favor the trading range to continue.
  • Poor follow-through and reversals are the hallmarks of a trading range.

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