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Weekly Crude Oil Tight Trading Range

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Market Overview: Crude Oil Futures

The market formed a weekly Crude Oil tight trading range in the form of 4 overlapping candlesticks. The bears see the tight trading range simply as a sideways pullback and want another strong leg down. The bulls want the 20-week EMA or the bull trend line to act as support. If the market trades lower, they want a failed breakout below the bull trend line.

Crude oil futures

The Monthly crude oil chart

Crude Oil Monthly: LH MTR, Wedge Bear Flag, Bear Need FT
  • The May monthly Crude Oil candlestick was a bear bar closing near its low.
  • Last month, we said that slightly favor the market to trade at least a little lower. Traders will see if the bears can create a follow-through bear bar closing below the 20-month EMA.
  • The bears managed to create a follow-through bear bar testing the 20-month EMA, but it did not close below it.
  • They got a reversal from a lower high major trend reversal (Apr 12) and a wedge bear flag (Nov 7, Sep 28, and Apr 12).
  • They want the bear trend line to act as resistance. So far this is the case. 
  • Next, they want a close below the 20-month EMA with sustained follow-through selling.
  • They want a bear leg to retest the December low.
  • The bulls see the pullback (Sept to Dec) simply as a deep pullback and hope to get a retest of the September high.
  • They got a reversal from a higher low major trend reversal (December) and a double bottom bull flag (May 4 and Dec 13).
  • While the market traded higher, the bulls were not able to get a strong breakout above the bear trendline. The bull leg formed a lower high.
  • The bulls hope that the current sideways-to-down move is simply a pullback and want at least a small retest of the April 12 high.
  • They want the 20-month EMA to act as support.
  • If the market trades lower, they want the bull trend line to act as support.
  • Since May was a bear bar closing near its low, it is a sell signal bar for June.
  • Odds slightly favor the market to trade at least a little lower.
  • Traders will see if the bears can create a follow-through bear bar closing below the 20-month EMA.
  • Or will the market continue to stall around the 20-month EMA area?
  • The market is in a large trading range (Trading range high: September 29, Trading range low: May 4).
  • Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction with sustained follow-through buying/selling.
  • The market is trading around the 20-month EMA, which is around the middle of the large trading range. It can be a magnet and an area of balance.

The Weekly crude oil chart

Crude Oil Weekly: Expanding Triangle, TTR, Middle of TR, Weekly Crude Oil Tight Trading Range
  • This week’s candlestick on the weekly Crude Oil chart was a bear bar closing near its low with a long tail above and closing below the 20-week EMA.
  • Last week, we said that traders will see if there is a breakout (from the OO pattern) from either direction with follow-through buying or selling. The first breakout can fail 50% of the time.
  • The market broke above the OO pattern earlier in the week but reversed lower from Wednesday onwards.
  • The bears see the tight trading range (last 4 weeks) simply as a sideways pullback and want another strong leg down (with the first leg being the April 5 to May 8 move).
  • They want the 20-week EMA and the bear trend line to act as resistance. So far this is the case.
  • The bears have managed to create 2 consecutive closes below the 20-week EMA.
  • If the bears can create a strong follow-through bear bar trading far below the May 24 low, it will increase the odds of another strong leg down lasting a few weeks.
  • The bulls want a retest of the April 12 high after the current pullback.
  • They want the 20-week EMA or the bull trend line to act as support. If the market trades lower, they want a failed breakout below the bull trend line. 
  • They want a reversal from a wedge (Apr 22, May 8, and May 24), a micro wedge (May 8, May 15, and May 24) and a higher low.
  • The problem with the bull’s case is that they have made repeated attempts to break above the 20-week EMA in the last 4 weeks but were not able to create sustained follow-through buying.
  • They will need to create strong bull bars trading far above the 20-week EMA to increase the odds of a retest of the April high.
  • Since this week’s candlestick is a bear bar closing near its low, it is a sell signal bar for next week but at a potential support area (bull trend line).
  • The market is forming a broadening triangle. Traders will see if the bears can create a strong retest and breakout below the May 24 low.
  • If the bears can create a strong breakout below the May 24 low with follow-through selling, the odds of a retest of the December low will increase.
  • If the bears continue to fail to push lower, we could see the market do the opposite and push higher instead in the weeks ahead.
  • The 4 overlapping candlesticks indicate that the market is in a tight trading range. It is also trading around the middle of the large trading range. It is an area of balance.
  • The market is in a large trading range (Trading range high: September 29, Trading range low: May 4).
  • Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction with sustained follow-through buying/selling.
  • Poor follow-through and reversals are hallmarks of a trading range.

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