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Crude Oil Retest Extreme High

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Market Overview: Crude Oil Futures

The weekly chart is forming a Crude Oil retest extreme high (Sept 28). The bulls want a strong retest and breakout above the September 28 high, completing the larger wedge pattern with the first two legs being August 10 and September 28. If the market trades higher, the bears want a reversal down from a small double top with the September 28 high.

Crude oil futures

The Weekly crude oil chart

Crude Oil Weekly: 3rd Leg Up, Retest High or LH MTR? Crude Oil Retest Extreme High
  • This week’s candlestick on the weekly Crude Oil chart was a consecutive bull bar closing above the middle of the bar.
  • Last week, we said that the odds favor the market to break out above the inside bar first and traders will see if the bulls can get a strong follow-through bull bar or will the market trade slightly higher but close with a long tail or with a bear body.
  • The bull managed to get a follow-through bull bar this week albeit weak (long tail above).
  • Previously, the bulls had a tight bull channel from June to September. That means strong bulls.
  • They see the one-bar pullback (Oct 6) simply as a test of the breakout point (trading range high; April high).
  • They want the 20-week EMA to act as a support and another strong leg up, completing the larger wedge pattern with the first two legs being August 10 and September 28. 
  • At the very least, they expect at least a small sideways to up leg to retest the prior leg extreme (Sept 28 high). The small leg to retest of the Sept 28 high is underway.
  • They hope to get a measured move based on the height of the 41-week trading range, which will take them to around $103.
  • The bears were not able to get follow-through selling following the big one-bar pullback.
  • They want a reversal down from a large double-top bear flag with the November 2022 high.
  • If the market trades higher, they want a reversal down from a small double top with the September 28 high.
  • They hope that the strong move up (from Jun to Sept) is simply a buy vacuum and a bull leg within a larger trading range. 
  • They want a strong bear leg to retest the trading range low (May low).
  • They will need to create consecutive bear bars closing near their lows trading far below the 20-week EMA to increase the odds of lower prices.
  • Since this week’s candlestick was a bull bar, it is a buy signal bar for next week albeit weak (long tail above).
  • For now, odds slightly favor the market to still be in the sideways to up phase.
  • Traders will see if the bulls can get another consecutive bull bar or will the market trade slightly higher but stall near the September 28 high area and reverse lower.
  • The bear trend lines becoming progressively less steep also indicates a loss of momentum for the bears.
  • The market likely has flipped into Always In Long.

The Daily crude oil chart

Crude Oil Daily: Weak Retest of September High, Wedge
  • The Crude Oil market traded sideways to up for the week. Thursday was a weak outside bull bar. Friday traded above it but reversed into a bear bar.
  • Last week, we said that the odds favor the market to trade at least a little higher. If the bulls get a couple of strong consecutive bull bars, the odds of a retest of September 28 high will increase.
  • This week traded higher but some of the candlesticks also had overlapping ranges. The bulls are not as strong as they hope to be.
  • The bulls got a strong rally from June in the form of a tight bull channel which lasted a long time.
  • They hope that the recent strong pullback (Oct 6) was simply a sell vacuum test of the breakout point (April high) and has alleviated the overbought conditions.
  • They want another strong leg up, completing the larger wedge pattern with the first two legs being August 10 and September 28.
  • They will need to create strong bull bars to increase the odds of retesting and break out above the September 28 high.
  • The bears got a reversal down from a large wedge pattern (Jul 13, Aug 10, and Sept 28), a smaller wedge (Sept 5, Sept 19, and Sept 28) and a final flag.
  • The recent move down (Oct 6) is strong in the form of a bear spike (strong bear bars with little overlap).
  • They see the current move up simply as a retest of the prior trend extreme (Sept 28). 
  • They want the market to stall below the September 28 high and reverse from a lower high major trend reversal or a double top.
  • They also want a reversal down from a smaller wedge pattern (Oct 9, Oct 16, and Oct 20).
  • For now, odds slightly favor Crude Oil to still be in the sideways to up phase.
  • However, the current move up (since Oct 6) is not very strong. It has the shape of a wedge and a lot of overlapping ranges.
  • The bulls need to do more by creating strong consecutive bull bars closing near their highs to increase the odds of another strong leg up.
  • If the move up continues to be weak (with overlapping bars, doji(s), and bear bars), odds are we will see the bears attempt a larger second leg sideways to down within 1-3 weeks.

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