Market Overview: Crude Oil Futures
The Crude oil futures weekly chart formed a Crude Oil wedge bull flag in a trading range. The weekly candlestick was a bull bar closing near the high. The bulls want a retest followed by a breakout above the 15-week trading range high. The bears got a reversal down from a wedge pattern but the follow-through selling was weak. If Crude Oil trades higher, the bears want a reversal down from around the trading range high, or from a double top bear flag with a November high.
Crude oil futures
The Monthly crude oil chart
- The February monthly Crude Oil candlestick was a bear doji closing in the upper half of the range with a long tail below.
- Last month, we said the odds slightly favor Crude Oil to trade at least a little lower and 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.
- February traded slightly below January low but reversed back into the 5-month trading range.
- The bears got a strong reversal down in June 2022 followed by a sideways trading range around the 20-month moving average.
- The first leg down from June was strong with consecutive bear bars.
- However, the second leg down was mostly sideways with overlapping bars and dojis. The last 4 candlesticks also had prominent tails below. This represents a loss of momentum.
- The bears will need to create a strong breakout below the 6-month trading range with consecutive bear bars closing near their lows to increase the odds of lower prices.
- If Crude Oil trades higher, they want a reversal lower from double top bear flag with November high and a lower high major trend reversal.
- They want a breakout below the 6-month trading range, completing the wedge pattern with the first 2 legs being September 26 and December 9.
- The bulls want a reversal higher from a lower low major trend reversal (Dec). They see February low as a higher low major trend reversal.
- 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.
- The bulls will need to create a strong breakout above the 6-month trading range with follow-through buying to increase the odds of a retest of the June high.
- For now, because of the poor follow-through selling over the last 4 months, we may begin to see Crude Oil do the opposite and attempt to push higher.
- Crude oil has also formed a small triangle which means the market is in breakout mode.
- The first breakout from a triangle can fail 50% of the time.
- Traders will see if the bulls can create a strong breakout above the triangle with follow-through buying, or if it will simply be a bull leg within the 6-month trading range.
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a Crude Oil wedge bull flag with bull bar closing near its high.
- Last week, we said if the bears do not start creating strong consecutive bear bars soon, odds will swing to a bull leg testing the 14-week trading range high within a few weeks.
- This week traded higher towards the trading range high.
- The bulls want a failed breakout below the September low and the bull trend line.
- They want a reversal up from the Crude Oil wedge bull flag (Jan 5, Feb 6 and Feb 22) and a higher low major trend reversal.
- They want a retest and breakout above the 15-week trading range high, 20-week exponential moving average and bear trend line.
- The bulls need to break far above these resistances with follow-through buying to increase the odds of higher prices.
- The bears got another leg down from a wedge pattern (Jan 3, Jan 18 and Feb 13) but did not get strong follow-through selling.
- If Crude Oil trades higher, they want the market to stall around the trading range high and the 20-week exponential moving average.
- If the market breaks above the 15-week trading range high, they want a reversal down from a double top bear flag with November high and a lower high major trend reversal.
- The last 15 candlesticks are overlapping sideways. That means Crude Oil is in a 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.
- Since this week was a bull bar closing near its high, it is a good buy signal bar for next week.
- Odds slightly favor Crude Oil to trade at least a little higher towards the 15-week trading range high.
- Traders will see if the bulls can create a strong follow-through bull bar and a breakout above the trading range, or if next week trades slightly higher but stalls around the trading range high and the 20-week exponential moving average again.
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