Market Overview: Crude Oil Futures
The Crude oil futures formed a HL MTR (Higher Low Major Trend Reversal) pattern on the weekly chart. The market traded lower but the bears failed to get follow-through selling. Poor follow-through and reversals are common within a trading range. The bulls need to create a follow-through bull bar next week to increase the odds of higher prices.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a reversal bar with a long tail below.
- Last week, we said that the bears will need to create follow-through selling to increase the odds of a retest of the May low. Poor follow-through and reversals are more common within a trading range.
- This week traded lower but reversed to close near the week’s high. The bears did not get follow-through selling.
- They still want to get a retest of the May 4 low and a breakout below.
- However, the lack of follow-through selling indicates that the bears are not as strong as they hope to be.
- The bulls want a reversal from a higher low major trend reversal (June 12) and a small double bottom bull flag (May 31 and Jun 12).
- They want a retest of the April high. The bulls will need to create a follow-through bull bar next week to increase the odds of higher prices.
- At the very least, they want a retest of the 20-week exponential moving average and the bear trend line.
- Since this week was a bull bar closing near its high, it is a buy signal bar for next week.
- Odds slightly favor the Crude Oil to trade at least a little higher.
- The market is in a 30-week trading range. The last 6 weeks formed a tight trading range.
- Poor follow-through and reversals are common within a 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.
- If the bears continue to fail to create sustained follow-through selling, the odds will swing in favor of the bull leg to begin within a few weeks.
The Daily crude oil chart
- Crude oil broke below the inside bear bar on Monday but there was no follow-through selling. The market then traded sideways to up for the rest of the week.
- Last week, we said that Crude Oil remain in a larger 29-week trading range and traders will BLSH (Buy Low, Sell High) in trading ranges. Poor follow-through and reversals are common in trading ranges.
- The bulls want a reversal up from around the bottom of the 30-week trading range; from a wedge bull flag (May 15, May 31 and Jun 12) and a higher low major trend reversal.
- They want a strong reversal breaking far above the 6-week tight trading range and trading far above the 20-day exponential moving average.
- For that, they will need to create consecutive bull bars closing near their highs to increase the odds of the bull leg beginning.
- If the market trades lower, the bulls hope that the current tight trading range (the last 6 weeks) is the final flag of the move down and want a reversal up from around the trading range low.
- The bears got a two-legged move down (May 31 and Jun 12) but fell short of the trading range low.
- They hope that this week was simply a pullback (bounce) and want another leg down testing the trading range low.
- Crude Oil has been trading within a tight trading range in the last 6 weeks, forming an expanding triangle.
- Poor follow-through and reversals are common in trading ranges.
- Crude Oil is also in a larger 30-week trading range. Most breakouts from trading ranges fail.
- Traders will BLSH (Buy Low, Sell High) in trading ranges until there is a strong breakout from either direction with follow-through buying/selling.
- If the bears fail to create sustained follow-through selling breaking far below the trading range low within the next few weeks, the odds of the bull leg beginning will increase.
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