Market Overview: Crude Oil Futures
The Crude Oil bulls need follow-through buying following this week’s breakout above the bear trend line. They also need to create a breakout above the expanding triangle top. The bears want a reversal from a lower high major trend reversal, from a double top bear flag (May 29 and Jun 21) and from around the top of the broadening triangle.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a consecutive bull bar closing in its upper half with a prominent tail above.
- Last week, we said that traders will see if the bulls can create a follow-through bull bar, even if it is only a bull doji.
- The bulls managed to create follow-through buying breaking above the bear trend line.
- They want a retest of the April 12 high after the recent pullback (Jun 4) and the bull trend line to act as support.
- They got a reversal from a wedge (Apr 22, May 8, and June 4) and a higher low major trend reversal.
- They hope to get a breakout above the broadening triangle.
- If there is a pullback, the bulls want the 20-week EMA to act as support.
- The bulls need to create a follow-through bull bar following this week’s breakout above the bear trend line.
- The bears got 3 pushes lower forming a wedge (Apr 22, May 8, and June 4).
- They see the last two weeks as a pullback and want the market to reverse back below the 20-week EMA.
- They want a reversal from a lower high major trend reversal, from a double top bear flag (May 29 and Jun 21) and from around the top of the broadening triangle.
- They hope to get a retest of the June 4 low, even if it forms a higher low.
- Since this week’s candlestick is a bull bar closing in its upper half, it is a buy signal bar for next week (prominent tail above). It is not a strong sell signal bar.
- The market may still trade at least a little higher.
- Traders will see if the bulls can create another follow-through bull bar next week (preferably breaking above the broadening triangle).
- If the bulls can create follow-through buying, especially one trading far above the broadening triangle, the odds of a retest of the April highs will increase.
- Or will the market trade slightly higher but stall and close with a long tail above or with a bear body?
- The market is trading around the middle of the large trading range. It is an area of balance.
- 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.
- Poor follow-through and reversals are hallmarks of a trading range.
- Sidenote: The prospect of a broadening war in the Middle East can cause volatility in energy prices.
The Daily crude oil chart
- The market traded sideways to up for the week with a small pullback on Friday.
- Last week, we said that traders would see if the bulls can create consecutive bull bars trading far above the 20-day EMA and the bear trend line. Or will the market stall (around the bear trend line area or the 20-day EMA again) and reverse lower?
- The bulls got a strong breakout trading far above the 20-day EMA and the bear trend line.
- They see the move down to June 4 simply as a deep pullback.
- They got a reversal from a wedge bull flag (Apr 18, May 8, and Jun 4) and a higher low major trend reversal.
- The move up since June 4 is in a tight bull channel and the bulls have a 6-bar bull micro channel. That means persistent buying.
- The bulls need to create a breakout above the expanding triangle with follow-through buying to increase the odds of a retest of the April high.
- If there is a pullback, the bulls want the 20-day EMA to act as support.
- The bear got a three-legged pullback (therefore a wedge – Apr 18, May 8, and Jun 4) trading below the 20-day EMA.
- They see the move from June 4 simply as a deep pullback.
- They want the market to stall around the current levels (around the expanding triangle high) followed by a retest of the June 4 low.
- They want a reversal from a double top bear flag (May 29 and Jun 21) and a lower high.
- The problem with the bear’s case is that the move up since June 4 is very strong.
- They need to create consecutive bear bars closing near their lows to indicate that they are back in control.
- So far, the market is trading slightly above the middle of the trading range which is an area of balance and a magnet.
- The move up from June 4 is in a tight bull channel with strong bull bars closing near their highs.
- The odds slightly favor the market to still be in the sideways-to-up phase still and favor at least a small second leg sideways-to-up after a small pullback.
- If a pullback begins, traders will see the strength of the pullback.
- If it is weak and shallow, holding above the middle of the trading range and the 20-day EMA, the odds of a retest of the current leg extreme (now Jun 21 high) will increase.
- Poor follow-through and reversals are hallmarks of a trading range.
- Sidenote: The prospect of a broadening war in the Middle East can cause volatility in energy prices.
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