Market Overview: Crude Oil Futures
The Crude oil futures traded slightly lower but had no follow-through selling on the weekly chart, a Crude Oil failed bear breakout. The bears hope that the move is simply a breakout test of the 16-week trading range low (breakout point) and wants at least a small second leg sideways to down retesting March 20 low. The bulls want a failed breakout below the 16-week trading range and hope that the tight trading range is the final flag of the move down.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bull bar with prominent tails above and below.
- Last week, we said that odds slightly favor the Crude Oil to trade at least a little lower and 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.
- This week traded slightly lower but stalled and closed with a bull body.
- Recently, the bears got a breakout below the 16-week trading range from a Low 4 sell setup.
- However, they did not get follow-through selling this week.
- The bears hope that this week was simply a breakout test of the 16-week trading range low (breakout point) and wants at least a small second leg sideways to down retesting March 20 low.
- They will need to create 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 broke 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 26, Dec 9 and Mar 20).
- 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 was a bull bar with a prominent tail above, it is a buy signal bar for next week albeit slightly weaker.
- The bulls will need to create a strong follow-through bull bar to increase the odds of a failed breakout below the 16-week trading range.
- Crude Oil could be forming a trending trading range.
- Reversals and poor follow-through are hallmarks of trading range activities.
- Traders will see if the bulls can create a strong follow-through bull bar, or will next week continue the move lower.
The Daily crude oil chart
- Crude Oil traded lower on Monday but reversed into a bull bar closing near its high. The market then traded higher with a pullback on Friday.
- Last week, we said that odds slightly favor the Crude Oil to get at least a small second leg sideways to down following any pullback (bounce).
- Recently, the bears got a reversal lower from a double top bear flag (Feb 13 and Mar 7).
- They then got follow-through selling breaking far below the triangle and 16-week trading range low 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 trades higher, they want the market to stall around the trading range low or the 20-day exponential moving average.
- They want at least a small second leg sideways to down, retesting March 20 low.
- The bulls want a failed breakout below the 16-week trading range.
- They broke the bear trend line by trading sideways.
- They hope that the 16-week trading range will be the final flag of the move down and want a reversal up from a wedge bottom (Sept 26, Dec 9 and Mar 20).
- They see Friday simply as a pullback and want at least another small second leg sideways to up.
- Since Friday was a doji with a long tail below, it is a weak sell signal bar.
- Odds slightly favor Crude Oil to still be in the sideways to up pullback phase early next week.
- Crude Oil could be forming a trending trading range.
- Poor follow-through and reversals are hallmarks of a trading range.
- Traders will BLSH (Buy Low, Sell High) of trading ranges.
- For now, odds slightly favor Crude Oil to get at least a small second leg sideways to down after this pullback (bounce) is over.
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