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Crude Oil Bears Need Follow-through

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Market Overview: Crude Oil Futures

Crude Oil bears need follow-through selling on the weekly chart. They see the recent move as a pullback and want a reversal from another lower high followed by another leg down completing the wedge pattern (with the first two legs being Aug 5 and Sep 10). The bulls hope to get another leg up to retest the September 24 high from a higher low major trend reversal.

Crude oil futures

The Weekly crude oil chart

Crude Oil Weekly: DT Bear Flag or HL MTR?, Crude Oil Bears Need Follow-through
  • This week’s candlestick on the weekly Crude Oil chart was an outside bear bar with a prominent tail below.
  • Last week, we said that the odds slightly favor the market to trade at least a little higher. Traders would see if the bulls can create a follow-through bull bar or if the market would trade slightly higher, but stall and close with a long tail or a bear body instead.
  • The market traded higher testing near the 20-week EMA but reversed into an outside bear bar.
  • The bulls got a reversal from a double bottom bull flag (Jun 4 and Sept 10) or a wedge (Jun 4, Aug 5, and Sep 10).
  • They want a failed breakout below the triangle and the market to reverse to the middle of the trading range.
  • While the market tested near the middle of the trading range, the bulls couldn’t create a follow-through bull bar following last week’s entry bar.
  • They see this week as a pullback and a retest of the prior low (Sep 10).
  • They hope to get another leg up to retest the September 24 high from a higher low major trend reversal.
  • Previously, the bears got a reversal from a double top bear flag (Aug 12 and Aug 26).
  • They got a strong breakout below the triangle but lacked follow-through selling.
  • They see the recent move as a pullback and want a reversal from another lower high followed by another leg down completing the wedge pattern (with the first two legs being Aug 5 and Sep 10).
  • They want a reversal from a double top bear flag (Aug 12 or Aug 26 high with Sep 24).
  • Since this week’s candlestick is a bear bar closing in its lower half, it is a sell signal bar for next week.
  • Traders will see if the bears can create a follow-through bear bar. If they do, that will increase the odds of a retest of the September 10 low.
  • Or will the market form a second leg sideways to up instead?
  • Poor follow-through and reversals are hallmarks of a trading range.
  • 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 lower third of the large trading range which can be the buy zone of trading range traders.
  • The ongoing / escalating conflict in the Middle East can keep energy prices volatile.

The Daily crude oil chart

Crude Oil Daily: Retest Prior Low or HL MTR?
  • The market formed a pullback on Monday followed by a breakout above last week’s high on Tuesday. There was no follow-through buying and the market traded lower from midweek onwards. Friday was an inside bull bar.
  • Last week, we said the odds slightly favor buyers below the first pullback. Traders would see if the bulls can continue to create follow-through buying trading above the 20-day EMA to retest the middle of the trading range or if the market would trade slightly higher but stall around the bear trend line area.
  • Previously, the bears got a breakout below the triangle pattern with follow-through selling.
  • They see the recent move as a pullback and want at least a small second leg sideways to down to retest the prior leg low (Sep 10), even if it forms a higher low.
  • They want the 20-day EMA or the bear trend line to act as resistance.
  • The bears want a retest of the September 10 low followed by a breakout, completing the wedge pattern (with the first two legs being August 5 and Sep 10).
  • The bulls want a failed breakout from the triangle pattern.
  • They got a reversal from a double bottom bull flag (Jun 4 and Sep 10), a wedge (Jun 4, Aug 5, and Sep 10) and an embedded wedge (Sep 4, Sep 6, and Sep 10).
  • They see this week simply as a pullback and a retest of the prior low (Sep 10).
  • They want a reversal from a higher low major trend reversal and another leg up to retest the September 24 high.
  • The bulls must create consecutive bull bars closing near their highs and trading far above the 20-day EMA to increase the odds of a reversal.
  • For now, traders will see if the bears can create more follow-through selling to retest the Sep 10 low. If they do, that will increase the odds of a breakout attempt below it.
  • Or will the market stall at a higher low and form a retest of the September 24 high instead?
  • 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.
  • The market is trading around the lower third of the large trading range which can be the buy zone of trading range traders.
  • The ongoing / escalating conflict in the Middle East can keep energy prices volatile.

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