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Monthly Crude Oil Lower High

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Market Overview: Crude Oil Futures

The market formed a monthly Crude Oil lower high in July. The bears want a reversal from a lower high major trend reversal, a wedge bear flag (Sep 28, Apr 12, and Jul 5), and a double top bear flag (Apr 12 and Jul 5). The bulls hope that the current sideways-to-down move is simply a pullback. They want a reversal from a double bottom bull flag (with Jun 4) and a higher low.

Crude oil futures

The Monthly crude oil chart

Crude Oil Monthly: No FT Bull Bar, Middle of Trading Range, Monthly Crude Oil Lower High
  • The July monthly Crude Oil candlestick was a bear bar closing around the middle of its range with long tails above and below.
  • Last month, we said that the odds slightly favor the market to trade at least a little higher. Traders will see if the bull can create a follow-through bull bar breaking above the bear trend line or will the market trade slightly higher but stall around the bear trend line area.
  • The market traded higher earlier in the month but stalled. It then traded sideways to down for the rest of the month from mid-month onward.
  • The bears want a reversal from a lower high major trend reversal, a wedge bear flag (Sep 28, Apr 12, and Jul 5), and a double top bear flag (Apr 12 and Jul 5).
  • They want the bear trend line to act as resistance. So far this is the case.
  • They want the market to close below the 20-month EMA in August followed by a breakout below the triangle pattern.
  • The bulls were not able to get a follow-through bull bar and a strong breakout above the triangle in July. The market formed a lower high.
  • The bulls hope that the current sideways-to-down move is simply a pullback.
  • They want a reversal from a double bottom bull flag (with Jun 4) and a higher low.
  • They want the 20-month EMA and the bull trend line to continue acting as support.
  • Since July was a bear bar closing around the middle of its range with prominent tails above and below, it is a sell signal bar albeit weaker.
  • Traders will see if the bears can create a follow-through bear bar closing below the 20-month EMA and breaking below the triangle.
  • Or will the market trade slightly lower (which it has done) but stall around the bull trend line area?
  • The market is trading around the 20-month EMA, which is the middle of the large trading range. It is an area of balance.
  • 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 possibility of a broadened military conflict in the Middle East will increase the volatility of energy prices.

The Weekly crude oil chart

Crude Oil Weekly: FT Selling below 20-Week EMA
  • This week’s candlestick on the weekly Crude Oil chart was a big bear bar closing near its low with a prominent tail above.
  • Last week, we said that traders will see if the bears can get a follow-through bear bar or will the market stall and reverse above the 20-week EMA.
  • The market attempted to reverse above the 20-week EMA in midweek but lacked follow-through buying. The market continued to trade lower on Thursday and Friday.
  • The bears see the prior strong rally simply as a buy vacuum within a trading range and a retest of the prior high (Apr 12).
  • They got a reversal from a lower high major trend reversal, a double top bear flag (Apr 12 and Jul 5) and from around the top of the large triangle pattern.
  • The bears managed to create a 5-bar bear microchannel which means persistent selling.
  • If there is a pullback (bounce), the bears want at least a small second leg sideways to down to retest the current leg low (now Aug 2).
  • They want the 20-week EMA to act as resistance.
  • Previously, the bulls had a 5-bar bull microchannel but have not been able to create a breakout above the triangle pattern.
  • They see the current move simply as a pullback and want at least a small retest of the recent high (July 5).
  • They want a reversal from a double bottom bull flag (Jun 4 and Aug 2) and a higher low.
  • They want the bull trend line to act as support.
  • Since this week’s candlestick is a bear bar closing near its low, it is a sell signal bar for next week.
  • The market may still trade at least a little lower.
  • However, the selloff is also slightly climactic.
  • There may be a minor pullback (bounce) followed by a second leg sideways to down in the weeks ahead.
  • Traders will see if the bears can continue to create follow-through selling.
  • Or will the market trade slightly lower but stall, beginning the minor pullback phase?
  • The market is trading around the middle of the large trading range which is an area of balance.
  • 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.
  • Poor follow-through and reversals are hallmarks of a trading range.
  • Side note: The ongoing turmoil in the Middle East can cause volatility in energy prices.

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