Crude Oil Sideways to Up

Market Overview: Crude Oil Futures

The market is forming a Crude Oil sideways to up pullback on the weekly chart. The bulls will need to create follow-through buying trading above the 20-week EMA to increase the odds of higher prices. The bears want the 20-week EMA and the bear trend line to act as resistance, forming a double top bear flag with December 26 high being the first leg.

Crude oil futures

The Weekly crude oil chart

• This week’s candlestick on the weekly Crude Oil chart was a bull bar closing near its high with a long tail below.
• Last week, we said that the odds slightly favor Crude Oil to trade at least a little lower. While the market can still trade lower, odds favor the trading range to continue.
• This week traded lower early in the week but reserved into a bullbar from midweek onwards.
• 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) and a wedge bull flag (Oct 6, Nov 16, and Dec 13).
• The bulls see this week simply as a retest of the prior trend extreme (Dec 13 low) and want a reversal from a small double bottom (Dec 13 and Jan 3).
• They will need to create follow-through buying trading above the 20-week EMA to increase the odds of higher prices. 
• The bears got a strong move down trading far below the 20-week EMA.
• The move down is in a tight bear channel and consists of 3 pushes therefore a wedge (Oct 6, Nov 16, and Dec 13).
• If the market trades higher, they want the 20-week EMA and the bear trend line to act as resistance, forming a double top bear flag with December 26 high being the first leg.
• They want another leg down retesting the prior leg low (Dec 13) and the trading range low (May low).
• Since this week’s candlestick is a bull bar closing near its high, it is a buy signal bar for next week.
• For now, odds slightly favor Crude Oil to trade at least a little higher.
• Traders will see if the bulls can create follow-through buying or will the market stall around the 20-week EMA area again in the coming weeks.
• Crude Oil is trading near the lower third of the trading range, which is the buy zone of trading range traders.
• Traders will BLSH (Buy Low, Sell High) until there is a breakout with sustained follow-through buying/selling from either direction.

The Daily crude oil chart

• Crude Oil traded lower earlier in the week but reversed into a bull bar on Wednesday with some follow-through buying on Thursday and Friday.
• Previously, we said that the market may still be in the minor pullback phase. If it remains weak and sideways, the odds of another strong leg down will increase. 
• So far, the market is still in the sideways pullback phase following the wedge pattern.
• The bear got 3 pushes down, forming a wedge pattern (Oct 6, Nov 16, and Dec 13).
• They want a retest of December, followed by another strong leg down after the current pullback.
• They want the 20-day EMA or the bear trend line to act as resistance.
• If the market trades higher, they want a reversal from a double top bear flag (with the first leg being Dec 26).
• 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 higher low major trend reversal (Dec 13). January 3 is a smaller higher low major trend reversal.
• They hope to get a retest of the September high. 
• They will need to create consecutive bull bars closing near their highs, trading far above the 20-day EMA and the bear trend line to increase the odds of higher prices.
• At the very least, they want a TBTL (Ten Bar, Two Leg) sideways to up pullback. The 2-legged pullback is currently underway.
• Crude Oil remains in a 74-week trading range. Traders will BLSH (Buy Low, Sell High) in trading ranges until there is a breakout with sustained follow-through buying/selling.
• The market is trading near the lower third of the trading range which is the buy zone for the trading range traders.
• Most breakouts from a trading range fail 80% of the time. Odds slightly favor the trading range to continue.
• For now, the market may still be in the minor pullback (sideways to up) phase.
• If it remains weak and sideways (as it is currently), the odds of another leg down will increase. 

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