Market Overview: Crude Oil Futures
The weekly chart formed a Crude Oil bull channel and a bull leg within a trading range. The bears see this week simply as a pullback and want at least a small second leg sideways to down. The bulls want a retest of the September 28 high after the current pullback. If the market trades lower, the bulls want the 20-week EMA or the bull trend line to act as support.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bull bar closing near its high.
- Last week, we said that the market may still be in the sideways-to-down pullback phase and the odds slightly favor the market to remain in the bull channel with pullbacks in between.
- The bears see the bull leg as forming a wedge bear flag (Dec 26, Jan 29, Apr 12). They also see an embedded wedge in the third leg up (Jan 3, Mar 19, and Apr 12).
- They see this week simply as a pullback and want at least a small second leg sideways to down.
- They want a failed breakout above the bull channel.
- They will need to create consecutive bear bars closing near their lows and trading below the 20-week EMA to convince traders that they are back in control.
- If the market trades higher, they want it to stall around the April 12 high area, forming a small double top.
- The bulls got a weak bull leg with overlapping candlesticks trading above the 20-week EMA testing the upper third of the large trading range.
- They want a retest of the September 28 high after the current pullback.
- If the market trades lower, the bulls want the 20-week EMA or the bull trend line to act as support.
- Since this week’s candlestick is a bull bar closing near its high, it is a buy signal bar for next week.
- For now, traders will see if the bulls can get a follow-through bull bar. If they do, the odds of a retest of the April 12 high and a breakout attempt will increase.
- Until the bears can create a strong breakout below the bull trend line and the 20-week EMA, the odds slightly favor the market to remain in the bull channel with pullbacks in between.
- The market is trading near the upper third of the trading range, which is the sell zone of the trading range traders.
- Traders will see if sellers appear around this area aggressively and if not, higher up in the trading range near the September high.
The Daily crude oil chart
- Crude Oil traded slightly lower on Monday but lacked follow-through selling. The market then traded sideways to up for the rest of the week, trading above the 20-day EMA.
- Last week, we said that the market may still be in the sideways-to-down pullback phase and that the prior move-up is strong enough to favor at least a small second leg sideways to up after a slightly larger pullback.
- The bulls hope that the bull leg to retest the trading range high (Sept 28) is currently underway.
- They want the current pullback to be weak and shallow (filled with bull bars, doji(s) and overlapping candlesticks).
- They want the 20-day EMA or the bull trend line to act as support.
- The bulls will need to create a strong retest of the April 12 high to increase the odds of the bull leg resuming.
- The bear sees the move up as forming a wedge bear flag (Dec 26, Jan 26, and Apr 12). They also see an embedded wedge forming in the third leg up (Mar 1, Mar 19, and Apr 5) and a small double top (Apr 5 and Apr 12).
- They see the move up simply as a bull leg within a trading range and a buy vacuum test of the trading range high area.
- They hope that the current pullback (bounce) is simply a retest of the April 12 high and want a reversal from a lower high major trend reversal.
- The problem with the bear’s case is that the selling pressure is not yet as strong as the bear’s hope it would be.
- They need to create strong consecutive bear bars trading far below the 20-day EMA and the bear trend line to increase the odds of the bear leg beginning.
- For now, traders will see if the bulls can create sustained follow-through buying above the 20-day EMA to retest the April 12 high.
- The prior move-up is strong enough to favor at least a small second leg sideways to up after a pullback. The second leg sideways to up could be underway.
- If the retest of the April 12 high is weak (with bear bars, doji(s) and overlapping candlesticks), the odds of another leg down will increase.
- The market is also trading near the upper third of the trading range, which can be the sell zone of trading range traders.
- Traders will see if sellers appear aggressively here, and if not, then the next area to watch for is around the September 28 high area.
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