Market Overview: Crude Oil Futures
Crude oil bear breakout below the inside bar on weekly chart. The odds slightly favor Crude Oil to trade at least a little lower, possibly testing near the 11-week trading range low. Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction from the trading range. For now, if there is a breakout, odds slightly favor a breakout below.
Crude oil futures
The Monthly crude oil chart
- The January monthly Crude Oil candlestick was a bear inside doji bar closing in the upper half of the range with a long tail below.
- Last month, we said that since the bears were not able to create follow-through selling in December, odds slightly favor crude oil to trade at least a little higher.
- January traded sideways around the 20-month exponential moving average.
- The bears got a strong reversal down in June 2022 followed by a sideways trading range around the 20-month moving average.
- They want a breakout below the 5-month trading range, completing the wedge pattern with the first 2 legs being September 26 and December 9.
- The move down since June is in a tight channel, which means the bears are stronger. The bears currently have a 3-bar bear micro channel.
- The last 3 candlesticks had prominent tails below. The bears will need to create consecutive bear bars closing near their lows to increase the odds of lower prices.
- The bulls want a reversal higher from a lower low major trend reversal (Dec).
- They see the move down since June simply as a deep pullback following the buy climax and want a retest of the June high.
- However, they have not yet been able to create credible buying pressure.
- Since January was a bear inside doji bar, Crude Oil is in breakout mode. The bulls want a breakout above its high while the bears want a breakout below it.
- The first breakout from an inside bar can fail 50% of the time.
- Sometimes, the bar after an inside bar is another inside bar, forming an ii (inside inside), which is also a breakout mode pattern.
- For now, because of the tight channel down and the lack of buying pressure, odds slightly favor Crude Oil to trade at least a little lower.
- Traders will see if the bears can create a strong breakout below January and December low, or if the Crude Oil trades slightly lower, but reverses back into the 5-month trading range.
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 that the odds slightly favor a breakout below the bear inside bar. If the bears create a consecutive bear bar, it could be the start of the bear leg to test the bottom of the 10-week trading range.
- The bears manage to get a strong breakout below the inside bar.
- Previously, the bears got a reversal lower from a double top bear flag (October 10 and November 7) breaking below the September low. However, they failed to get follow-through selling.
- The bears want another leg down breaking below the December low, and completing the wedge pattern (the first two legs being Sept 26 and Dec 9).
- This week, they got a reversal down from a double-top bear flag (Dec 1 and Jan 18).
- The bottom of the 11-week trading range is close enough and may be tested in the next couple of weeks.
- The bulls want a failed breakout below the September low and the bull trend line.
- They got another leg higher to retest the December high from a higher low major trend reversal (Jan 5).
- However, the bulls were not able to break above the 11-week trading range high, the 20-week exponential moving average and the bear trend line.
- The bulls hope that this week was simply a deep pullback and wants a reversal higher from a double bottom bull flag (Jan 5 and Feb 3).
- Since this week was a big bear bar closing near its low, it is a good sell signal bar for next week. It is a weak buy signal bar.
- The odds slightly favor Crude Oil to trade at least a little lower, possibly testing near the 11-week trading range low.
- The last 11 candlesticks are overlapping sideways. That means Crude Oil is in a small trading range.
- Poor follow-through and reversals are more likely within a trading range. Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction.
- For now, if there is a breakout, odds slightly favor a breakout below.
- Crude Oil could be forming a trending trading range. This remains true.
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