Crude Oil No Follow-through Selling

Market Overview: Crude Oil Futures

There was no follow-through selling in the Crude oil futures market. The weekly candlestick was an inside bar closing near its high. Odds slightly favor a breakout above the inside bar. Traders will see if the bulls can create follow-through buying and a breakout above the 8-week trading range.

Crude oil futures

The Weekly crude oil chart

• This week’s candlestick on the weekly Crude Oil chart was an inside bull bar closing near its high.
• Last week, we said that the odds slightly favor Crude Oil to trade at least a little lower. Crude Oil is in a small trading range and poor follow-through and reversals are more likely within a trading range.
• This week had a shaved bottom and almost a shaved top. That means the bulls bought from the open into the close of the week.
• The bears got a reversal lower from a double-top bear flag (October 10 and November 7) breaking below the September low in December. However, they failed to get follow-through selling.
• Bears want another leg down breaking below the December low, completing the wedge pattern (the first two legs being Sept 26 and Dec 9).
• They want a strong breakout and a measured move down using the height of the September to November trading range which will take them to around $56.
• However, they failed with no follow-through selling after the outside bear bar from last week.
• Since this week was a bull bar closing near its high, it is a weak sell signal bar for next week.
• The bulls want a failed breakout below the September low and the bull trend line. 
• They hope last week was simply a deep pullback and want another leg higher to retest the December high from a higher low major trend reversal.
• They need to create consecutive bull bars closing near their highs breaking far above the 20-week exponential moving average and the bear trend line to convince traders of a reversal higher.
• This week’s candlestick is an inside bar, which means Crude Oil is in breakout mode. Sometimes the bar after an inside bar is another inside bar, thereby forming an ii (inside-inside) pattern, which is also a breakout mode pattern.
• Since it is an inside bull bar closing at its high, odds favor a breakout above this week’s high. The first breakout from an inside bar can fail 50% of the time.
• Traders will see if the bulls can create a consecutive bull bar, or if next week trades higher first but stalls around the 20-week exponential moving average or the bear trend line and reverses lower again.
• The last 8 candlesticks are overlapping sideways. That means Crude Oil is in a small 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 from this small trading range.
• Crude Oil could be forming a trending trading range.

The Daily crude oil chart

• Crude oil traded sideways to up for the week.
• Last week, we said that the odds slightly favor Crude oil to trade at least a little lower.
• The bears got a reversal lower from a double-top bear flag (Dec 1 and Dec 27) and a small double top (Dec 27 and Jan 3).
• Despite the strong leg down, they were not able to create a small second leg sideways to down.
• They hope that the current pullback (bounce) will stall around January 3 high and form a double top.
• They want a retest and breakout below the December low forming the wedge pattern with the first two legs being September 26 and December 9.
• 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) and a higher low major trend reversal.
• They see the move down from January 3 simply as a retest of the December low.
• The bulls have a 7-bar bull micro channel. That means persistent buying.
• With Friday closing as a bull bar near its high, it is a good buy signal bar for Monday. 
• Odds slightly favor Crude Oil to trade at least a little higher.
• However, Crude Oil also formed a small trading range in the last 8 weeks. 
• Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction from this small trading range.
• Traders will see if the bulls can create strong follow-through buying above the December high and the bear trend line, or if Crude Oil trades higher but stalls around the trading range high.

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