Crude Oil Strong Breakout

Market Overview: Crude Oil Futures

Crude oil strong breakout below the 16-week trading range. They want a measured move down to around 57 using the height of the 16-week trading range. The bulls want a failed breakout and a reversal back into the middle of the trading range from a lower low major trend reversal and a wedge pattern (Sept 8, Dec 9 and Mar 17).

Crude oil futures

The Weekly crude oil chart

• This week’s candlestick on the weekly Crude Oil chart was a big bear bar closing near its low. 
• Last week, we said that odds slightly favor Crude Oil to trade at least a little lower and traders will see if the bears can create a strong follow-through bear bar or will the market trade slightly lower but stall and close with a bull body or a long tail below.
• The bears got a consecutive bear bar breaking below the 16-week trading range.
• They triggered the L4 (Low 4) sell signal and got follow-through selling this week.
• They will need to continue creating strong follow-through selling to increase the odds of a measured move down to around 57 using the height of the 16-week trading range.
• 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 have broken the bear trend line by trading sideways.
• They want a reversal back into the middle of the trading range from a lower low major trend reversal and a wedge pattern (Sept 8, Dec 9 and Mar 17).
• Because of the strong selloff, the bulls will need at least a strong reversal bar or a micro double bottom before they would be willing to buy more aggressively.
• Since this week is a big bear bar closing near the low, it is a weak buy signal bar for next week. It is a good sell signal bar.
• Odds slightly favor the Crude Oil to trade at least a little lower.
• Traders will see if the bears continue to get follow-through selling or will next week trades slightly lower but stalls and close with a bull body or a long tail below.

The Daily crude oil chart

• Crude Oil broke below the triangle and 16-week trading range with follow-through selling.
• Last week, we said that Crude Oil formed a triangle pattern and is in breakout mode and traders should be prepared for breakouts to fail unless there is strong follow-through price action following the breakout.
• Recently, the bears got a reversal lower from a double top bear flag (Feb 13 and Mar 7).
• They then triggered the larger L4 (Low 4) sell signal and got follow-through selling breaking far below the triangle with follow-through selling.
• They want a measured move down using the height of the 16-week trading range which will take them to around 57.
• If Crude Oil pullback higher, they want at least a small second leg sideways to down, testing March 17 low.
• The bulls want a failed breakout below the 16-week trading range.
• They have broken the bear trend line by trading sideways.
• They hope that the trading range will be the final flag of the move down and want a reversal higher from a wedge pattern (Sept 8, Dec 9 and Mar 17).
• They also hope that Thursday inside doji is a one-bar final flag of a climactic selloff with March 15 and March 16 forming a micro double bottom.
• The last 3 candlesticks have a lot of overlapping price action and prominent tails below.
• Crude Oil could be forming a trending trading range.
• Since Friday was an outside bear bar with a long tail below, it is a weaker sell signal bar.
• For now, odds slightly favor Crude Oil to get at least a small second leg sideways to down following any pullback (bounce).

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