Crude Oil Strong Pullback

Market Overview: Crude Oil Futures

The weekly chart formed a Crude Oil strong pullback testing the breakout point (April high; trading range high) and the 20-week EMA. The bulls want the 20-week EMA to act as a support and a reversal up from a higher low. The bears want a reversal down from a large double-top bear flag with the November 2022 high and a parabolic wedge (Jul 13, Aug 10, and Sept 28).

Crude oil futures

The Weekly crude oil chart

• This week’s candlestick on the weekly Crude Oil chart was a big bear bar closing in the lower half of the candlestick.
• Previously, we said that while the odds slightly favor the market to still be in the sideways to up phase, the move up since June has lasted a long time and is slightly climactic. A minor pullback can begin at any moment.
• The pullback has begun this week.
• The bears want a reversal down from a large double-top bear flag with the November 2022 high and a parabolic wedge (Jul 13, Aug 10, and Sept 28).
• They hope that the strong move up is simply a buy vacuum and a bull leg within a larger trading range. 
• They want a strong bear leg to retest the trading range low (May low) to begin.
• This week, they got a big bear bar testing the 20-week EMA.
• Next week, they will need to create follow-through selling, closing below the 20-week EMA to increase the odds of a deeper pullback.
• Previously, the bulls have had a tight bull channel since June. That means strong bulls.
• They see the pullback this week simply as a test of the breakout point (trading range high; April high).
• They want the 20-week EMA to act as a support and a reversal up from a higher low, completing the larger wedge pattern with the first two legs being August 10 and September 28.
• At the very least, they expect at least a small sideways to up leg to retest the leg extreme high (Sept 28).
• They hope to get a measured move based on the height of the 41-week trading range, which will take them to around $103.
• Since this week’s candlestick was a big bear bar closing in the lower half, it is a sell bar for next week.
• For now, odds slightly favor the market to still be in the sideways to down pullback phase.
• Traders will see if the bears can create follow-through selling, closing below the 20-week EMA. Or will the market trade slightly lower, but stall around the 20-week EMA area?
• The bear trend lines becoming progressively less steep also indicates a loss of momentum for the bears.
• The market likely has flipped into Always In Long.

The Daily crude oil chart

• The market traded lower for the week, closing far below the 20-day EMA.
• Previously, we said that while the market continues to slightly favor sideways to up, the recent move up is slightly climactic and has lasted a long time. A minor pullback can begin at any moment. 
• The pullback phase has begun and tested the April high which was the breakout point of the recent rally.
• The bears want a reversal down from a large wedge pattern (Jul 13, Aug 10, and Sept 28, a smaller wedge (Sept 5, Sept 19, and Sept 28) and a final flag.
• The move down is strong in the form of a bear spike (strong bear bars with little overlap).
• That increases the odds of at least a small second leg sideways to down after a small pullback.
• The bears hope to get a spike and channel down and for the market to have flipped into Always In Short.
• The bulls got a strong rally from June in the form of a tight bull channel which lasted a long time.
• They hope that the strong pullback this week is simply a sell vacuum test of the breakout point (April high).
• They want the pullback to stall around the April high and form a higher low followed by another strong leg up, completing the larger wedge pattern with the first two legs being August 10 and September 28.
• For now, odds slightly favor the market to still be in the sideways to down pullback phase, and for a second leg lower after a pullback.
• The pullback should last at least TBTL (Ten Bars, Two Legs).
• If the bears continue to create consecutive bear bars closing near their lows, it will increase the odds of the bear leg testing the May low to begin.

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