Market Overview: Crude Oil Futures
The market formed a Crude Oil double top bear flag on the Monthly chart. The bears need to create a follow-through bear bar following the close below the 20-month EMA in November. The bulls want the 20-month EMA or the bull trend line to act as support and a reversal from a higher low major trend reversal.
Crude oil futures
The Monthly crude oil chart
- The November monthly Crude Oil candlestick was a bear bar with a long tail below, closing slightly below the 20-month EMA.
- Last month, we said that the odds slightly favor November to trade at least a little lower. Traders will see if the bears can get a follow-through bear bar or not.
- The bears got a follow-through bear bar.
- They hope to get a reversal from a double top bear flag with the November 2022 high.
- They see the market as forming a larger trading range and want a reversal down from a lower high major trend reversal.
- Since this week closed below the 20-month EMA, the bears will need to create a follow-through bear bar in December.
- If they get that, the odds of a retest of the trading range low (May) will increase.
- The bulls see the current move simply as a deep pullback and hope to get a second leg sideways to up to retest the September high.
- They want the 20-month EMA or the bull trend line to act as support and a reversal from a higher low major trend reversal.
- Since November was a bear bar closing in its lower half, it is a sell signal bar for December albeit weaker (long tail below).
- For now, odds slightly favor December to trade at least a little lower in the first half of the month.
- Traders will see if the bears can get another follow-through bear bar. If they do, the odds of retesting the May will increase.
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bear bar closing near its low with a long tail above.
- Last week, we said that the first breakout from an inside bar can fail 50% of the time. If the bears continue to get a couple of strong consecutive bear bars, it will swing the odds in favor of retesting the trading range low.
- This week traded above last week’s high, testing the 20-week EMA but reversed into a bear reversal bar (likely a failed breakout above the inside bar).
- The bears got a two-legged sideways-to-down pullback trading below the 20-week EMA.
- The move down is in a tight bear channel. That means persistent selling.
- They hope that the bear leg to retest the May low has begun.
- If the market trades higher, the bears want the 20-week EMA to act as resistance. The bears got what they wanted.
- They want another leg down completing the wedge pattern with the first two legs being October 6 and November 16.
- Previously, the bulls had a tight bull channel from June to September.
- They see the current move as a two-legged pullback, forming a higher low major trend reversal.
- They want a reversal up from a trend channel line overshoot followed by a retest of the September high.
- They want a larger second leg up lasting many weeks, with the first leg being the move-up from June to September.
- The bulls will need to create a couple of strong consecutive bull bars, trading above the 20-week EMA to increase the odds of higher prices.
- If the market trades lower, they want a reversal up from a wedge bull flag with the first two legs being October 6 and November 16.
- Since this week’s candlestick is a bear bar closing near its low, it is a sell signal bar for next week.
- For now, until the bulls can create a few strong consecutive bull bars, odds slightly favor the market to still be in the sideways to down phase.
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