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Crude Oil Outside Bear Bar, Lower Low Major Trend Reversal on Monthly

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Market Overview: Crude Oil Futures

The Crude Oil futures November candlestick was a Crude Oil outside bear bar with tails above and below. Bulls want a reversal higher from a lower low major trend reversal. The bears want a strong breakout below the 20-month exponential moving average and the major bull trend line with follow-through selling. 

Crude oil futures

The Monthly crude oil chart

Crude Oil Outside Bear Bar but Long Tail Below on Monthly Chart
  • The November monthly Crude Oil candlestick was an outside bear bar with long tails above and below.
  • Last month, we said that the odds slightly favor sideways to up in the first half of November. Traders will see if the bulls get a consecutive bull bar, or if Crude Oil trades higher first, but reverses to close with a bear body or has a prominent tail above.
  • The bears wanted a second leg sideways to down retesting the September low. The target for the bears is the 20-month exponential moving average. The bears got what they wanted.
  • However, the November candlestick closed above last month’s low and has a long tail below. The bears are not as strong as they would like to be.
  • The bears want a strong breakout below the 20-month exponential moving average and the major bull trend line with follow-through selling.
  • The bulls hope October was a 1 bar final flag.
  • They want a reversal higher from a lower low double bottom 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.
  • Since November has a bear body, it is not a strong buy signal bar for December. The long tail below makes it a weaker sell signal bar.
  • The bar after an outside bar often is an inside bar or has a lot of overlapping price action.
  • Crude Oil is in a trading range of around 74 and 94 and is also forming an expanding triangle.
  • Traders will BLSH (Buy Low, Sell High) until there is a strong breakout from either direction.
  • The major bull trend line and 20-month exponential moving average remain as supports below.
  • The US Government plans to refill the SPR (Strategic Petroleum Reserve) at some point around $67-72 which will likely provide a floor on price and prevent a sharp crash. (Source: US to complete 180 million barrel drawdown…)

The Weekly crude oil chart

Crude Oil Weekly: LL MTR Setup, outside Bull bar
  • This week’s candlestick on the weekly Crude Oil chart was an outside bull bar closing above the middle of the bar.
  • Last week, we said that the odds slightly favor Crude Oil to trade at least a little lower. Traders will see if the bears can create follow-through selling following the breakout below the major bull trend line, or if it trades lower but reverses into a bull bar.
  • This week traded below last week and September low but reversed into a bull bar. 
  • The bulls hope that the current move down is simply a retest of the September low after breaking the bear trend line, and want a reversal higher from a lower low double bottom major trend reversal.
  • They need to create follow-through buying next week to increase the odds of higher prices. 
  • While the bulls got a reversal bar this week, the prominent tail above indicates they are not as strong as they would like to be. 
  • The next target for the bulls is the 20-week exponential moving average.
  • The bears got a reversal lower from a double top bear flag (October 10 and November 7).
  • They wanted a retest of the September low and got it this week.
  • However, they failed to get follow-through selling after breaking below the major bull trend line.
  • They hope that this week was simply a pullback and want at least a small second leg sideways to down retesting November 28 low.
  • The bears need to create consecutive bear bars closing far below the bull trend line and September low to increase the odds of lower prices.
  • Since this week was a bull bar, it is a buy signal bar for next week. The prominent tail above makes it a weaker buy signal bar.
  • Crude Oil is in a trading range of around 74 and 94. Traders will BLSH (Buy Low, Sell High) until there is a strong breakout from either direction.
  • If the bulls get a follow-through bull bar next week, the odds of a retest of the trading range high increase.
  • The US Government plans to refill the SPR (Strategic Petroleum Reserve) at some point around $67-72 which will likely provide a floor on price at some point and prevent a catastrophic sharp crash. (Source: US to complete 180 million barrel drawdown…)

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