Market Overview: Crude Oil Futures
Crude oil minor pullback formed on the weekly chart, partially closing the gap. The bulls expect at least a small second leg sideways to up after the current pullback. The bears need to create follow-through selling to increase the odds of the start of the bear leg within the trading range.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bear bar with a small tail below.
- Last week, we said that buying at the top of a trading range is not an ideal setup. The odds slightly favor Crude Oil to still be in the sideways to up phase and for a second leg sideways to up after a moderate pullback.
- This week traded lower and partially closed the gap from 3 weeks ago.
- The bulls want a failed breakout below the 16-week trading range. They hope that the tight trading range is the final flag of the move down.
- They got a reversal up from a lower low major trend reversal and a wedge bottom (Sept 26, Dec 9, and Mar 20).
- The move up is in a strong spike (consecutive bull bars closing near their highs) and the bulls hope that the market has switched into Always In Long.
- The recent big gap up was also a sign of strength from the bulls. Traders will see if the gap remains open or will the current pullback close the gap.
- If the gap remains open, that is another indication of strength from the bulls.
- They want a second leg sideways to up to retest April 12 high after the current pullback followed by a breakout above the 16-week trading range.
- The bears got a breakout below the triangle and 16-week trading range but did not get follow-through selling.
- They hope that the current deep pullback will form another lower high (against the November high).
- They want the market to stall around the trading range high and retest the March low.
- Because of the strong move up, the bears will need a strong sell signal bar or at least a micro double top before they would be willing to sell more aggressively.
- Since this week was a big bear bar closing near the low, it is a sell signal bar for next week.
- Traders will see if the bears can create a follow-through bear bar or will next week trade slightly lower but reverse to close with a bull body or a long tail below.
- For now, odds slightly favor at least a small second leg sideways to up after the current pullback.
- If next week is another big bear bar closing near its low, it could swing the odds to the start of the bear leg within the 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 Daily crude oil chart
- Crude Oil traded down for the week. Friday traded lower but closed as a bull bar with a prominent tail above.
- Last week, we said that odds slightly favor Crude Oil to trade at least a little higher and a small second leg sideways to up after a small pullback.
- The bulls hope that the market has flipped into Always In Long.
- They want a failed breakout below the 16-week trading range. They hope that the 16-week trading range will be the final flag of the move down.
- They got a reversal up from a lower low major trend reversal and a wedge bottom (Sept 26, Dec 9 and Mar 20).
- The bulls will need to break far above the trading range high with follow-through buying to convince traders that a reversal up may be underway.
- They want the 20-day exponential moving average to act as a support.
- The move up from the March 20 low is strong enough for the bulls to expect at least a small second leg sideways to up after a pullback. This remains true.
- Previously, the bears got a breakout trading far below the triangle and 16-week trading range low and expecting at least a small second leg sideways to down after a pullback.
- Instead, Crude Oil traded higher in a tight bull channel with bull bars closing near their highs and bear bars that had no follow-through selling.
- The bears hope that the rally is simply a buy vacuum test of the trading range high.
- This week, they manage to create a tight bear channel down from around the trading range high.
- They want at least a small second leg sideways to down closing the April 3 gap.
- Since Friday was a bull bar closing above the middle of the range, it is a buy signal bar for Monday.
- However, it followed a tight bear channel down. It is not an ideal buy setup.
- Buyers will be more comfortable if there is at least a micro double bottom or a strong reversal bar.
- The bulls will need to create strong follow-through buying next week to increase the odds of a retest of the April 12 high and a breakout attempt above the trading range.
- For now, odds slightly favor a small second leg sideways to up after the current pullback.
- Traders will see if the bulls can create a strong retest of the April 12 high or will the market stall there and reverses lower.
- If the bears continue to get consecutive bear bars closing near their lows instead, the odds will swing in favor of the bear leg beginning to retest the March low.
- Traders will BLSH (Buy Low, Sell High) in trading ranges until there is a strong breakout from either direction with follow-through buying/selling.
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