Market Overview: Crude Oil Futures
The market formed a weekly Crude Oil breakout below the triangle pattern. The next target for the bears is the December low. They need to create a follow-through bear bar to confirm the breakout. The bulls want a reversal from a double bottom bull flag (Jun 4 and Sept 6) or a wedge (Jun 4, Aug 5, and Sep 6).
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a big bear bar closing near its low.
- Last week, we said traders would see if the bears could 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 would the market trade slightly lower, but stall and reverse to close with a long tail or a bull body?
- The bears got a reversal from a double top bear flag (Aug 12 and Aug 26).
- They got a strong breakout below the triangle this week.
- They need to create a follow-through bear bar to confirm the breakout.
- The next target for the bears is the December low.
- The bulls want a reversal from a double bottom bull flag (Jun 4 and Sept 6) or a wedge (Jun 4, Aug 5, and Sep 6).
- They see the current move as a large two-legged pullback (Jun 4 and Sept 6).
- They want a failed breakout below the triangle and the market to reverse to the middle of the trading range.
- 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 still trade at least a lower next week.
- Traders will see if the bears can create a follow-through bear bar. If they do, that will increase the odds of retesting the December or May lows.
- 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 lower third of the large trading range which can be the buy zone of trading range traders.
- 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.
The Daily crude oil chart
- The market traded lower for the week, breaking below the triangle pattern.
- Previously, we said that traders would see if the bulls could retest the August 12 high with follow-through buying or if the market would trade slightly higher but stall and reverse lower.
- The market formed a retest of the August 12 high but stalled and reversed lower.
- The bears got a reversal from a double top bear flag (Aug 12 and Aug 26) and a lower high.
- They got a breakout below the triangle pattern with follow-through selling.
- If there is a pullback, the bears want at least a small second leg sideways to down to retest the current leg low (now Sep 6).
- The next target for the bears is the December low.
- The bulls want a failed breakout from the triangle pattern.
- They see the current move as a large two-legged pullback (Jun 4 and Sep 6).
- They want a reversal from a double bottom bull flag (Jun 4 and Sep 6) or a wedge (Jun 4, Aug 5, and Sep 6).
- The bulls must create consecutive strong bull bars closing near their highs to increase the odds of a reversal.
- So far, the selloff from August 26 is in a tight bear channel.
- Odds slightly favor the market to trade at least a little lower.
- Traders will see if the bears can continue to create strong bear bars testing near the December low.
- Or will the market trade slightly lower but start to stall and reverse higher instead?
- The market is trading around the lower third of the large trading range which can be the buy zone of trading range traders.
- Poor follow-through and reversals are hallmarks of a trading range.
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