Market Overview: Crude Oil Futures
The overlapping candlesticks in Crude Oil, poor follow-through and frequent reversals are hallmarks of trading range price action. The bears hope to get a second leg sideways to down to retest the September low followed by a breakout below the triangle. The bulls want a reversal from a double bottom bull flag (Jun 4 and Sep 10) and a higher low. They also see a larger double bottom bull flag (Dec 13 and Sep 10).
Crude oil futures
The Monthly crude oil chart
- The October monthly Crude Oil candlestick had a small bull body closing in its lower half with a long tail above (has the shape of a doji bar).
- Last month, we said that traders would see if the bulls could create a strong bull bar testing the top of the triangle, or if the market would trade higher but stall and close with a long tail or a bear body below the 20-month EMA instead.
- The bears saw the move in October as a one-bar pullback and want a reversal from a wedge bear flag (Apr 12, Jul 5, and Oct 8).
- They hope to get a second leg sideways to down to retest the September low followed by a breakout below the triangle.
- They need to create strong bear bars with follow-through selling to increase the odds of lower prices.
- The bulls see the sideways-to-down move (to Sep 10) as a two-legged pullback.
- They want a reversal from a double bottom bull flag (Jun 4 and Sep 10) and a higher low.
- They also see a larger double bottom bull flag (Dec 13 and Sep 10).
- They see October’s rally as breaking the minor bear trend line followed by a retest of the September 10 low, forming a higher low major trend reversal.
- They want a retest of the triangle top and a strong breakout above.
- If the market trades lower, the bulls want the September low and the bottom of the triangle to act as support.
- Since October’s candlestick had a small bull body with a long tail above, it is not a strong buy signal bar for November.
- The market is trading around the middle of the trading range which is an area of balance.
- The overlapping candlesticks, long tail (Oct), poor follow-through and frequent reversals are hallmarks of trading range price action.
- For now, traders will see if the bulls can create a strong bull bar retesting the October 8 high.
- Or will the bears be able to create a retest and breakout below the September 10 low instead?
- The increasingly tight triangle pattern indicates that Crude Oil is in a breakout mode.
- Because the market is also in a trading range (sideways overlapping candlesticks), traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction with sustained follow-through buying/selling.
- The lower third of the large trading range can be the buy zone of trading range traders.
- The broadening conflict in the Middle East will keep energy prices volatile.
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bull doji closing around the middle of its range with tails above and below.
- Last week, we said that the odds favor the first breakout above last week’s high. Traders would see if the bulls could create another follow-through bull bar closing above the 20-week EMA or if the market will trade slightly higher but close with a long tail or a bear body instead.
- The market gapped down on Monday and traded lower early in the week. Crude Oil reversed higher but closed off its high following a pullback on Friday.
- The bulls see the current move as a deep pullback and want a retest of the October 8 high.
- They want a reversal from a double bottom bull flag (Oct 1 and Oct 29).
- The bulls must create a strong entry bar next week with follow-through buying to increase the odds of a retest of the October 8 high.
- If the market trades lower, they want the September low or the bottom of the triangle to act as support.
- The bears got a reversal from a lower high and a double top bear flag (Aug 12 and Oct 8).
- They saw last week as a pullback and want a small second leg sideways-to-down to retest the October 18 low. They got that this week.
- However, the candlestick closed with a small bull body and a long tail below which indicates limited follow-through selling and that the bears are not as strong as they hope to be.
- If the market trades higher, they want the 20-week EMA to act as resistance.
- Since this week’s candlestick is a bull doji closing around the middle of its range, it is not a strong sell signal bar for next week.
- Traders will see if the bulls can create a follow-through bull bar or if the bears can create a retest of the October low instead.
- The lower third of the large trading range can be the buy zone of trading range traders.
- The overlapping candlesticks, poor follow-through and frequent reversals are the hallmarks of trading range price action.
- 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.
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