Market Overview: Crude Oil Futures
The weekly chart formed a Crude Oil minor pb (pullback). The bulls need to continue creating follow-through buying trading above the 20-week EMA and the bear trend line to increase the odds of a reversal. The bears want a retest of the December low and another strong leg down after the current pullback.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bull bar closing above the middle of its range with a prominent tail above.
- Last week, we said that traders will see if the bulls can create a follow-through bull bar, which may lead to the start of the minor pullback phase.
- The bulls got a follow-through bull bar this week.
- They 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 and a wedge bull flag (Oct 6, Nov 16, and Dec 13).
- The bulls will need to create a couple of strong consecutive bull bars, 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. That means persistent selling.
- They got 3 pushes down forming a wedge pattern (Oct 6, Nov 16, and Dec 13).
- If the market trades higher, the bears want the 20-week EMA and the bear trend line to act as resistance, followed by another leg down retesting the current leg low (Dec 13).
- They see the current move simply as a minor pullback following the wedge pattern.
- Since this week’s candlestick is a bull bar closing in its upper half, it is a weaker buy signal bar for next week.
- Traders will see if the bulls can create another follow-through bull bar to test near the 20-week EMA.
- For now, the odds slightly favor the current pullback to be minor and favor at least a small sideways to down leg to retest the December 13 low after the pullback.
- 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 sideways to up for the week. Wednesday to Friday were 3 consecutive doji(s) trading around the 20-day EMA.
- Last week, we said that the selloff since September has lasted a long time. A minor pullback can begin at any moment. The minor pullback has begun.
- The bear got 3 pushes down, forming a wedge pattern (Oct 6, Nov 16, and Dec 13).
- They want a retest of the December low, 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.
- The bulls see the prior move down 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. 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.
- Crude Oil remains in a 72-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 phase.
- Traders will see the strength of the pullback. If it remains weak and sideways, the odds of another strong leg down will increase.
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