Market Overview: Crude Oil Futures
Crude Oil sideways trading range formed in the last 3 weeks. The bulls want a reversal from a double bottom (Mar 20 and May 4) and a higher low major trend reversal (May 15). The bears want another leg down testing the May 4 low. The market is in a 27-week trading range. Traders will BLSH (Buy Low, Sell High) in trading ranges until there is a strong breakout from either direction with follow-through buying/selling.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bull doji with prominent tails.
- Last week, we said that traders will see if the bears can continue the 6-bar bear micro channel or will the bulls be able to create a follow-through bull bar breaking the minor bear trend line to test near the 20-week exponential moving average.
- This week broke above the minor bear trend line and tested near the 20-week exponential moving average but closed below last week’s high.
- The prior move down was in a 6-bar bear micro channel. That means strong bears.
- The first pullback (bounce) from such a strong bear micro channel often has sellers above.
- The bears hope that this week was simply a pullback and want another leg down testing the May 4 low.
- The bulls want a reversal from a double bottom (Mar 20 and May 4) and a higher low major trend reversal (May 15).
- They hope that the strong selloff from April 12 is simply a sell vacuum test of the trading range low.
- Since this week was a bull doji with prominent tails, it is neither a buy nor a sell signal bar.
- The bulls will need to create consecutive bull bars breaking far above the 20-week exponential moving average to increase the odds of higher prices.
- Buy Vacuum and Sell Vacuum within a trading range can make the range extremes tests appear very strong, but the breakout is more likely to fail.
- The market is in a 27-week trading range. The last 3 candlesticks are also mostly overlapping sideways, a tight trading range.
- Traders will BLSH (Buy Low, Sell High) in trading ranges until there is a strong breakout from either direction with follow-through buying/selling.
- Poor follow-through and reversals are common within a trading range.
- For now, odds slightly favor the trading range to continue.
- Traders will see if the bulls can create another follow-through bull bar testing the 20-week exponential moving average or will the bears be able to create a retest of the May 4 low.
The Daily crude oil chart
- Crude Oil was mostly sideways for the week. Thursday reversed down from above the 20-day exponential moving average but there was no follow-through selling on Friday.
- Last week, we said that Crude Oil is in a 26-week trading range. Traders will BLSH (Buy Low, Sell High) in trading ranges until there is a strong breakout from either direction with follow-through buying/selling.
- The bulls hope that the prior selloff is simply a sell vacuum test of the trading range low.
- They got a second leg sideways to up from May 15 but have not yet been able to trade far above the 20-day exponential moving average.
- They want a reversal up from a higher low major trend reversal (May 15).
- At the very least, they hope to get at least another leg up completing the wedge bear flag with the first two legs being May 10 and May 24.
- They will need to create consecutive bull bars closing near their highs trading far above the 20-day exponential moving average to increase the odds of the bull leg beginning.
- The bears got a strong bear leg testing the March low. The move down was in a parabolic wedge (Apr 21, Apr 28, and May 4).
- It is strong enough for traders to expect at least a small second leg sideways to down. So far, they have not yet been able to resume the leg lower.
- They want a retest of the May 4 low followed by a strong breakout below.
- They see the pullback in the last 3 weeks simply as forming a double-top bear flag (May 10 and May 24) at the 20-day exponential moving average.
- If the bulls fail to break far above the 20-day exponential moving average within the next 1-3 weeks, the odds of a retest of the trading range low increase.
- Crude Oil is in a 27-week trading range. The last 3-week formed a tight trading range around the 20-day exponential moving average.
- Traders will BLSH (Buy Low, Sell High) in trading ranges until there is a strong breakout from either direction with follow-through buying/selling.
- Poor follow-through and reversals are common in trading ranges. Most breakouts from trading ranges fail.
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