Crude Oil Follow-through Buying

Market Overview: Crude Oil Futures

The Crude oil futures bulls got follow-through buying this week following last week’s close above the 20-week exponential moving average. The bulls want a strong breakout above the 16-week trading range. The bears want the market to stall around the trading range high. If there is a breakout above, the bears want a failed breakout within a few weeks.

Crude oil futures

The Weekly crude oil chart

• This week’s candlestick on the weekly Crude Oil chart was a bull bar closing with a small tail above.
• Last week, we said that odds slightly favor Crude Oil to trade at least a little higher and at least a small second leg sideways to up after a small pullback.
• This week was a follow-through bull bar following last week’s close above the 20-week exponential moving average.
• The bulls want a failed breakout below the 16-week trading range. They hope that the tight trading range is the final flag of the move down.
• They got a reversal up from a lower low major trend reversal and a wedge bottom (Sept 26, Dec 9, and Mar 20). 
• The move up is in a strong spike (consecutive bull bars closing near their highs) and the bulls hope that the market has switched into Always In Long.
• The big gap-up last week was also a sign of strength from the Bulls.
• They want a breakout above the 16-week trading range and a retest of November and June highs.
• For that, the bulls will need to create a strong breakout above the 16-week trading range with sustained follow-through buying to increase the odds of a reversal higher.
• If Crude Oil trades lower, they want a reversal up from a higher low major trend reversal.
• The bears got a breakout below the triangle and 16-week trading range but did not get follow-through selling.
• They hope that the current deep pullback will form another lower high (against the November high). 
• They want the market to stall around the trading range high and retest the March low. 
• Should the market break above the trading range high, they want a failed breakout above it within a few weeks.
• Because of the strong move up, the bears will need a strong sell signal bar or at least a micro double top before they would be willing to sell more aggressively.
• Since this week was a bull bar closing near its high, it is a weak sell signal bar for next week. It is a buy signal bar for next week.
• However, the buy signal bar is at the 16-week trading range high. Buying at the top of a trading range is not an ideal setup.
• For now, odds slightly favor Crude Oil to still be in the sideways to up phase and for a second leg sideways to up after a moderate pullback.
• Traders will see if the bulls can create a strong breakout above the trading range high or will the market trade slightly higher but stall there.
• Traders will BLSH (Buy Low, Sell High) in trading ranges until there is a strong breakout from either direction with follow-through buying/selling.

The Daily crude oil chart

• Crude Oil traded sideways to up for the week with a small pullback on Thursday and Friday.
• Last week, we said that odds slightly favor Crude Oil to trade at least a little higher and a small second leg sideways to up after a small pullback.
• The bulls hope that the market has flipped into Always In Long.
• They want a failed breakout below the 16-week trading range.
• They broke the bear trend line (in March) by trading sideways.
• They hope that the 16-week trading range will be the final flag of the move down.
• They got a reversal up from a lower low major trend reversal and a wedge bottom (Sept 26, Dec 9 and Mar 20).
• The bulls will need to break far above the trading range high with follow-through buying to convince traders that a reversal up may be underway.
• The move up from the March 20 low is strong enough for the Bulls to expect at least a small second leg sideways to up after a small pullback.
• Previously, the bears got a breakout trading far below the triangle and 16-week trading range low and expecting at least a small second leg sideways to down retesting March 20 low after a pullback.
• Instead, Crude Oil traded higher in a tight bull channel with bull bars closing near their highs and bear bars that had no follow-through selling.
• The bears hope that the rally is simply a buy vacuum test of the trading range high.
• They want the market to stall around the trading range high and reverse lower.
• For that, they will need to create consecutive bear bars closing near their lows.
• For now, odds slightly favor Crude Oil to trade at least a little higher and a small second leg sideways to up after a small pullback.
• Traders will see if the bulls can create a strong breakout above the trading range high or will the market stall there and reverses lower.

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