Market Overview: Crude Oil Futures
The market formed a weekly Crude Oil pullback testing the middle of the trading range. The bears need to create a follow-through bear bar to increase the odds of testing the bottom of the triangle. The bulls see the current move simply as a pullback and want at least a small retest of the recent high (July 5).
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bear bar closing in its lower half with a prominent tail below.
- Last week, we said that the odds slightly favor the market to trade at least a little lower. Traders will see if the bears can create another follow-through bear bar or if the market trades slightly lower but stalls, closing with a long tail or a bull body.
- The market traded lower and closed below the 20-week EMA.
- 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.
- Since this week closed below the 20-week EMA, the bears need to create a follow-through bear bar to increase the odds of testing the bottom of the triangle.
- If there is a pullback (bounce), the bears want another leg down from a lower high major trend reversal. They want the top of the triangle to act as resistance.
- Previously, the bulls had a 5-bar bull microchannel which means persistent buying.
- However, the bulls have not yet been able to create a breakout above the triangle pattern.
- The bulls hope that the 20-week EMA will act as support.
- They see the current move simply as a pullback and want at least a small retest of the recent high (July 5).
- Since this week’s candlestick is a bear bar closing below the middle of its range, it is a sell signal bar for next week.
- Traders will see if the bears can get a follow-through bear bar or will the market stall around the current area and reverse above the 20-week EMA.
- 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.
The Daily crude oil chart
- The market traded lower earlier in the week followed by sideways trading. Thursday traded lower but reversed into a bull reversal bar but lacked follow-through buying on Friday.
- Last week, we said that the odds slightly favor the market to trade at least a little lower. Traders will see if there are follow-through selling early in the week. Or will the market trade slightly lower but stall and reverse up from a wedge bull flag?
- Previously, the bulls got a strong breakout trading far above the bear trend line, testing the triangle top.
- They see the current move simply as a pullback testing the middle of the trading range.
- They want a reversal from a wedge bull flag (Jul 10, Jul 16, and Jul 23) and a micro wedge (Jul 23, Jul 25, and Jul 26).
- They want the market to reverse above the 20-day EMA.
- They hope to get a retest of the July 5 high followed by a breakout with follow-through buying.
- The bear sees the recent rally as a buy vacuum and a bull leg within a trading range, testing the prior high (April 12).
- They got a pullback from around the top of the triangle. They want a retest of the June 4 low.
- They want a reversal from a double top bear flag (Apr 12 and Jul 5) and a lower high major trend reversal (against the April high)
- They see the last 4 trading days simply as a pullback and want another strong leg down to retest the June 4 low.
- They need to create consecutive bear bars closing near their lows and trading far below the 20-day EMA to indicate they are back in control.
- So far, the market traded back to the middle of the trading range which is an area of balance.
- Traders will see if the bulls can create a pullback to retest the July 5. Or will the bears get another leg down to retest the bottom of the triangle?
- If the sideways pullback (in the last 4 days) continues to have weak follow-through buying, we will likely see another sideways to down leg form after that.
- The market is trading around the middle of the trading range which is an area of balance.
- 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.
Market analysis reports archive
You can access all weekend reports on the Market Analysis page.
