Crude Oil Strong Rally, Bulls Need Follow-through

Market Overview: Crude Oil Futures

Crude oil strong rally reversed higher closing above the bear trend line and the 20-week exponential moving average. The bulls need to create a follow-through bull bar to increase the odds of higher prices. Bears want a reversal lower from a double top bear flag with August 30 or July 29 high.

Crude oil futures

The Weekly crude oil chart

• This week’s candlestick on the weekly Crude Oil chart was big bull bar closing near the high.
• Last week, we said that Crude Oil may start to see some sideways to up pullback beginning within a few weeks. The pullback likely has begun this week.
• While the move down since June was in a tight bear channel, the candlesticks had a lot of overlapping price action. The bears are not yet as strong as they could have been.
• The bears want at least a small second leg sideways to down retesting the September low after a pullback.
• They want a reversal lower from a double top bear flag with August 30 or July 29 high.
• Bulls want a reversal from a wedge bull flag (June 22, July 14 and Sept 26) and a lower low major trend reversal.
• The bulls will need to create consecutive bull bars closing near their highs breaking far above the bear trend line and the 20-week exponential moving average to convince traders that the correction may be over.
• They got a strong rally this week, closing above the bear trend line and 20-week exponential moving average.
• The bulls will need to create a follow-through bull bar next week to increase the odds of higher prices.
• Since this week was a big bull bar closing near the high, odds favor at least slightly higher prices.
• Traders will see if the bulls can create a follow-through bull bar. If they do, especially if it is strong, increases the odds of a retest of July or August high.
• However, if next week trades higher, but reverses to close with a bear body instead, the odds of a retest of the September low would increase.

The Daily crude oil chart

• This week gapped up and continued to trade higher for the rest of the week.
• The bulls want a reversal from a wedge pattern (June 22, July 14 and Sept 26) and a lower low major trend reversal.
• The 20-week exponential moving average and bear trend line are resistances above.
• This week, the bulls created consecutive bull bars closing near their highs breaking far above the resistances. 
• This was the strongest spike up since the sell-off in June.
• Traders expect at least a small second leg sideways to up after a small pullback.
• The bulls want to create a spike and channel with the August 30 and July 29 highs as the next targets.
• While the move down since June was in a tight bear channel, there was a lot of overlapping price action.
• That means the bears are not yet as strong as they could have been.
• The bears want a 2-legged sideways to down re-test of the Sept low after the pullback.
• If Crude Oil continues to trade higher, they want a reversal lower from a double top bear flag with August 30 or July 29 high.
• For now, the spike up this week is strong enough for traders to expect at least slightly higher prices and a second leg sideways to up after a small pullback.

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