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Crude Oil Wedge

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Market Overview: Crude Oil Futures

The monthly chart is forming a Crude Oil wedge bear flag. The bulls will need to create a follow-through bull bar closing above the 20-month EMA to increase the odds of the bull leg beginning. The bears want a retest of the December low from a wedge bear flag (Dec 26, Jan 29, Mar 1) and hope that the 20-month EMA will act as resistance.

Crude oil futures

The Monthly crude oil chart

Crude Oil Monthly: Follow-through Bull Bar, Overlapping, Crude Oil Wedge Bear Flag
  • The February monthly Crude Oil candlestick was a bull bar closing in its upper half and above the 20-month EMA.
  • Last month, we said that the market is in a tight trading range. Poor follow-through and reversals are the hallmarks of a trading range.
  • The market traded briefly lower earlier in the month followed by sideways to up for the rest of the month consolidating around the January high area.
  • Previously, the bears got a reversal from a double top bear flag with the November 2022 high and a lower high major trend reversal.
  • They see the market as forming a larger trading range and January and February simply as a pullback.
  • They want a second leg sideways to down and a retest of the December low from a wedge bear flag (Dec 26, Jan 29, Mar 1).
  • They hope the 20-month EMA will act as resistance.
  • The bulls see the pullback (Sept to Dec) simply as a deep pullback and hope to get a retest of the September high.
  • They want a reversal from a higher low major trend reversal (December) and a double bottom bull flag (May 4 and Dec 13).
  • They want the 20-month EMA or the bull trend line to act as support. 
  • The bulls will need to create a follow-through bull bar closing above the 20-month EMA to increase the odds of the bull leg beginning.
  • Since February was a bull bar closing in its upper half, it is a buy signal bar for March.
  • The prior three candlesticks (Dec to Feb) are mostly overlapping each other. The market is in a tight trading range with a slight slope up.
  • Poor follow-through and reversals are the hallmarks of a trading range.
  • The market was previously trading in the lower third of the trading range which is the buy zone of trading range traders. It is now trading near the middle of the large trading range.
  • Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction with sustained follow-through buying/selling.
  • Side note: The conflict in the Middle East can cause energy prices to remain volatile especially if it escalates further.

The Weekly crude oil chart

Crude Oil Weekly: Wedge Bear Flag, Poor Sell Signal Bar
  • This week’s candlestick on the weekly Crude Oil chart was an outside bull bar closing in its upper half.
  • Last week, we said that the sideways to up pullback phase may have ended if the bears can create follow-through selling closing below the 20-week EMA.
  • The market traded slightly lower earlier in the week but reversed higher for the rest of the week. The bears were not able to get a follow-through bear bar.
  • The bears see the recent sideways to up pullback as forming a wedge bear flag (Dec 26, Jan 29, Mar 1).
  • They want the 20-week EMA and the bear trend line to act as resistance. However, the market is currently trading further away from the 20-week EMA.
  • They want another leg down to retest the prior leg low (Dec 13) and the trading range low (May low) after the current pullback.
  • They will need a strong sell signal bar before traders will be willing to sell more aggressively.
  • The bulls see the selloff to the December 13 low simply as a bear leg within a trading range.
  • They want a reversal from a higher low major trend reversal (Dec 13), a wedge bull flag (Oct 6, Nov 16, and Dec 13) and a small double bottom bull flag (Jan 13 and Feb 5).
  • They will need to create sustained follow-through buying above the 20-day EMA and the January high to increase the odds of the bull leg beginning.
  • If the market trades lower, they want a reversal from a wedge bull flag with the first two legs being January 3 and February 5.
  • Since this week’s candlestick is a bull bar closing near its high, it is a buy signal bar for next week.
  • For now, odds slightly favor the market to still be in the sideways to up pullback phase.
  • Traders will see if the bulls can create follow-through buying trading far above the January high. If they do, the odds can swing in favor of the bull leg beginning.
  • Crude Oil is currently in an 82-week trading range. Traders will BLSH (Buy Low, Sell High) until there is a breakout with sustained follow-through buying/selling from either direction.
  • Poor follow-through and reversals are the hallmarks of a tight trading range.
  • The market was previously trading in the lower third of the trading range which is the buy zone of trading range traders. It is now trading near the middle of the large trading range.

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