Market Overview: Crude Oil Futures
The weekly chart is forming a Crude Oil sideways pullback below the 20-week EMA and the bear trend line. The bears want another leg down from a double top bear flag. The bulls will need to create follow-through buying trading above the 20-week EMA to increase the odds of higher prices.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bear doji closing around the middle of the candlestick.
- Last week, we said that the odds slightly favor Crude Oil to trade at least a little higher. Traders will see if the bulls can create follow-through buying or will the market stall around the 20-week EMA area again in the coming weeks.
- This week traded sideways for most of the week and spiked higher on Friday. However, the market traded back lower to close below last week’s high.
- The bulls 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 (Dec 13) and a wedge bull flag (Oct 6, Nov 16, and Dec 13).
- They want a reversal from a small double bottom (Dec 13 and Jan 3).
- They will need to create follow-through buying 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 and consists of 3 pushes therefore a wedge (Oct 6, Nov 16, and Dec 13).
- They see the current move simply as a two-legged pullback and want the 20-week EMA and the bear trend line to act as resistance, forming a double top bear flag with December 26 high being the first leg.
- They want the pullback to be sideways with overlapping candlesticks, doji(s) and bear bars. So far this is the case.
- They want another leg down retesting the prior leg low (Dec 13) and the trading range low (May low).
- Since this week’s candlestick is a bear doji closing around the middle of its range, it is not a strong buy signal bar for next week.
- For now, Crude Oil may still be in the sideways to up minor pullback phase.
- However, if the bulls continue to fail creating sustained follow-through buying, we may start to see more selling pressure within a few weeks.
- Traders will see if the bulls can create more follow-through buying or will the market stall around the 20-week EMA area in the coming weeks.
- Crude Oil is currently in a 75-week trading range.
- 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 for most of the week and spiked higher on Friday. However, Friday’s candlestick reversed into a bear reversal bar.
- Last week, we said that the market may still be in the minor pullback (sideways to up) phase. If it remains weak and sideways (as it is currently), the odds of another leg down will increase.
- The bear got 3 pushes down, forming a wedge pattern (Oct 6, Nov 16, and Dec 13).
- They want a retest of December, 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.
- If the market trades higher, they want a reversal from a double top bear flag (Dec 26 and Jan 12). So far, this is the case.
- The bulls see the move down to December 13 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 (Dec 13). January 3 is a smaller 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. So far, the minimum requirement has been fulfilled.
- If the market trades lower, the bulls want the December low or the May trading range low to act as support.
- For now, the market may still be in the minor pullback (sideways to up) phase.
- If it remains weak and sideways (as it is currently), the odds of another leg down will increase.
- If the bulls can get a series of consecutive bull bars closing near their highs, trading far above the 20-day EMA and the bear trend line, it might swing the odds in favor of the bull leg beginning.
- Crude Oil remains in a 75-week trading range. Traders will BLSH (Buy Low, Sell High) in trading ranges until there is a breakout with sustained follow-through buying/selling.
- Most breakouts from a trading range fail 80% of the time. Odds slightly favor the trading range to continue.
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