Market Overview: Crude Oil Futures
The market formed a weekly Crude Oil big bear bar closing below the 20-week EMA. The bears must create a follow-through bear bar (following this week’s close below the 20-week EMA) to increase the odds of retesting the September 10 low. The bulls see this week as a deep pullback and want another leg up to complete the wedge pattern (with the first two legs being Sep 24 and Oct 8). They want a reversal from a double bottom bull flag (Oct 1 and Oct 18).
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 with a small tail below.
- Last week, we said the market may still be sideways to up phase. Traders would see if the bulls could create another follow-through bull bar breaking above the triangle top or if the market would stall and form a pullback closing below the 20-week EMA instead.
- The market formed a deep pullback closing below the 20-week EMA.
- The bulls got a reversal from a double bottom bull flag (Jun 4 and Sept 10 or Dec 13 and Sep 10) and a wedge (Jun 4, Aug 5, and Sep 10).
- They got a retest of the triangle high but there was no strong breakout.
- They see this week as a deep pullback and want another leg up to complete the wedge pattern (with the first two legs being Sep 24 and Oct 8).
- They want a reversal from a double bottom bull flag (Oct 1 and Oct 18).
- The bulls must create consecutive bull bars closing near their highs to increase the odds of a breakout above the triangle top.
- The bears see the recent move as a two-legged pullback (Sep 24 and Oct 4).
- They want a reversal from a lower high and a double top bear flag (Aug 12 and Oct 8).
- They want a retest of the September 10 low, even if it forms a higher low.
- They must create a follow-through bear bar (following this week’s close below the 20-week EMA) to increase the odds of retesting the September 10 low.
- 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 (perhaps early next week).
- Traders will see if the bears can create a follow-through bear bar or if the market will trade slightly lower but close with a long tail or a bull body instead.
- The overlapping candlesticks, poor follow-through and frequent reversals are the hallmarks of trading range price action.
- The lower third of the large trading range can be the buy zone of trading range traders.
- 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 ongoing / escalating conflict in the Middle East can keep energy prices volatile.
The Daily crude oil chart
- The market tested the 20-day EMA on Monday but closed with a long tail below. Crude Oil then gapped down on Tuesday and traded sideways to down for the rest of the week.
- Last week, we said the market may still be sideways to up phase. Traders would see if the bulls could create more follow-through buying or if the market would trade slightly higher but form a double top with the October 8 high instead.
- The bears see the recent move (to Oct 8) as a deep pullback and want a retest of the prior leg low (Sep 10), even if it forms a higher low.
- They hope the top of the triangle will act as resistance. This was the case.
- They got a reversal from a double top bear flag (Aug 12 and Oct 8).
- If the market trades higher, they want another lower high and a reversal from a double top bear flag with the October 10 high.
- They want at least a small second leg sideways to down leg to retest the current leg low (now Oct 18).
- Previously, the bulls got a reversal from a higher low major trend reversal (Oct 1) to retest the top of the triangle but there was no strong breakout.
- They see the current move as a deep pullback. They want a reversal from a double bottom bull flag (Oct 1 and Oct 18) and a higher low.
- They want another leg up completing the wedge pattern with the first two legs being September 24 and October 24 highs.
- The bulls must create consecutive bull bars closing near their highs to increase the odds of a breakout above the triangle pattern.
- So far, the market continues to be in a large trading range.
- Traders will see if the bears can continue to create bear bars to retest the September 10 low.
- Or will the bulls be able to create a reversal to retest the October 8 high from a higher low instead?
- Poor follow-through and reversals are hallmarks of a trading range.
- The lower third of the large trading range can be the buy zone of trading range traders.
- Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction with sustained follow-through buying/selling.
- The ongoing / escalating conflict in the Middle East can keep energy prices volatile.
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