Market Overview: Crude Oil Futures
The bulls want a Crude Oil higher low MTR (Major Trend Reversal) on the weekly chart. They want a larger second leg up lasting many weeks, with the first leg being the move-up from June to September. The bears hope that the bear leg to retest the May low has begun.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was an inside bear doji closing slightly below the middle of its range.
- Last week, we said that while the market can still trade sideways to down for a couple more weeks, a small pullback can begin within 1-3 weeks.
- This week traded sideways, around the middle of last week’s range. It is an area of temporary balance.
- The bears got a larger second leg sideways to down trading below the 20-week EMA.
- The move down is in a 6-bar bear microchannel. That means persistent selling.
- They hope that the strong move up (from Jun to Sept) was simply a buy vacuum and a bull leg within a larger trading range.
- They hope that the bear leg to retest the May low has begun.
- If the market trades higher, the bears want another leg down completing the wedge pattern with the first two legs being October 6 and November 16.
- They want the 20-week EMA to act as resistance.
- Previously, the bulls had a tight bull channel from June to September.
- They see the current move as a two-legged pullback, forming a higher low major trend reversal.
- They want a reversal up from a trend channel line overshoot followed by a retest of the September high.
- They want a larger second leg up lasting many weeks, with the first leg being the move-up from June to September.
- The bulls will need to create a couple of consecutive bull bars, trading above the 20-week EMA to increase the odds of higher prices.
- If the market trades lower, they hope that this week’s inside bar will be a one-bar final flag of the move, followed by a reversal up.
- Since this week’s candlestick is an inside bar, the market is in breakout mode.
- The bulls want a breakout above, while the bears want a breakout below the inside bar.
- The first breakout can fail 50% of the time.
- While the market can still trade sideways to down for a couple more weeks, a small pullback can begin within a few weeks.
- However, if the bears continue to get a couple of strong consecutive bear bars, it will swing the odds in favor of retesting the trading range low.
The Daily crude oil chart
- Crude Oil traded higher early in the week but there was no follow-through. Wednesday formed a retest of the November 16 low but reversed to close with a long tail below. Friday was an inside bear bar.
- Last week, we said that while the selloff from September is quite strong, it has also lasted a long time and is slightly climactic. A minor pullback can begin at any moment.
- This week was mostly sideways trading within last week’s range.
- The bear got 3 pushes down, forming a wedge pattern (Oct 6, Nov 8, and Nov 16).
- They want a retest of the May low, followed by a breakout below.
- Wednesday formed a 1-bar retest of the November 16 low but reversed most of the move.
- The bears hope to get a continuation lower early next week.
- If the market trades higher, they want the 20-day EMA or the bear trend line to act as resistance.
- The bulls got a strong rally from June to September in the form of a tight bull channel.
- They hope that the current move down is simply a deep pullback and has alleviated the prior overbought conditions.
- They want a reversal from a wedge bull flag (Oct 6, Nov 8, and Nov 16) and a trend channel line overshoot.
- 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 to increase the odds of higher prices.
- Since Friday was an inside bar, the market is in breakout mode.
- Because it is a bear inside bar closing near its low, odds slightly favor the first breakout to be below it. It is not a strong buy signal bar for Monday.
- Traders will see if the bears can create follow-through selling (early next week). If they get that, the odds of a retest of the November 16 low will increase.
- For now, while the selloff from September is quite strong, it has also lasted a long time and is slightly climactic.
- A minor pullback can begin within a few weeks.
Market analysis reports archive
You can access all weekend reports on the Market Analysis page.
