Market Overview: Crude Oil Futures
The market formed a monthly Crude Oil double top bear flag trading around the middle of the trading range. The bears want the market to close far below the 20-month EMA and a breakout below the triangle pattern. The bulls want a reversal from a double bottom bull flag (Jun 4 and Aug 5) and a higher low.
Crude oil futures
The Monthly crude oil chart
- The August monthly Crude Oil candlestick was a bear bar closing slightly below the middle of its range with a long tail below.
- Last month, we said that traders would see if the bears can create a follow-through bear bar closing below the 20-month EMA and breaking below the triangle or if the market would trade slightly lower but stall around the bull trend line area.
- The market traded lower but had no strong breakout from the bull trend line. The monthly candlestick closed near the 20-month EMA, the middle of the trading range.
- 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 managed to get a follow-through bear bar in August but the prominent tail below the recent candlesticks indicates that the bears are not yet as strong as they hoped to be.
- They want the market to close far below the 20-month EMA and a breakout below the triangle pattern.
- The bulls hope that the current sideways-to-down move is simply a pullback.
- They want a reversal from a double bottom bull flag (Jun 4 and Aug 5) and a higher low.
- They want the 20-month EMA and the bull trend line to act as support.
- Since August was a bear bar closing around the middle of its range with a prominent tail below, it is a sell signal bar albeit weaker.
- Traders will see if the bears can create another follow-through bear bar closing below the 20-month EMA and breaking below the triangle.
- Or will the market trade continue to stall around the 20-month EMA area?
- The market trades around the 20-month EMA, 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 Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bear bar closing near its low with a long tail above.
- Last week, we said that traders would see if the bulls can create a strong entry bar closing above the 20-week EMA or if the market would trade slightly higher (perhaps early next week) but stall and reverse back below the 20-week EMA.
- The market traded higher early in the week but lacked follow-through buying and reversed to close below the 20-week EMA.
- Previously, the bears created a reversal from a lower high major trend reversal from around the top of the large triangle pattern.
- They want a retest of the recent leg low (Aug 5) and the bull trend line.
- They want a reversal from a double top bear flag (Aug 12 and Aug 26).
- The bulls want a reversal from a double bottom bull flag (Jun 4 and Aug 5), a wedge (Jun 4, Aug 5, and Aug 21), and a higher low.
- They want a retest of the recent high (Aug 12). While the market traded higher this week, the lack of follow-through buying indicates that the bulls are not yet as strong as they hope to be.
- If the market trades lower, the bulls hope that the bull trend line will 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 trade slightly lower (probably early in the week).
- Traders will see if the bears can create a strong follow-through bear bar. If they do, that will increase the odds of a retest and breakout attempt below the triangle.
- Or will the market trade slightly lower, but stall and reverse to close with a long tail or a bull body?
- The market is trading around the middle of the large trading range which is an area of balance and has been acting as a magnet.
- The sideways overlapping candlesticks (in the last 6 weeks) indicate trading range price action.
- Poor follow-through and reversals are hallmarks of a trading range.
- 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.
- 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.
