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Crude Oil Strong Pullback

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Market Overview: Crude Oil Futures

The weekly chart formed a Crude Oil strong pullback testing the breakout point (April high; trading range high) and the 20-week EMA. The bulls want the 20-week EMA to act as a support and a reversal up from a higher low. The bears want a reversal down from a large double-top bear flag with the November 2022 high and a parabolic wedge (Jul 13, Aug 10, and Sept 28).

Crude oil futures

The Weekly crude oil chart

Crude Oil Weekly: PB Testing 20-Week EMA & BO Point, Crude Oil Strong Pullback
  • This week’s candlestick on the weekly Crude Oil chart was a big bear bar closing in the lower half of the candlestick.
  • Previously, we said that while the odds slightly favor the market to still be in the sideways to up phase, the move up since June has lasted a long time and is slightly climactic. A minor pullback can begin at any moment.
  • The pullback has begun this week.
  • The bears want a reversal down from a large double-top bear flag with the November 2022 high and a parabolic wedge (Jul 13, Aug 10, and Sept 28).
  • They hope that the strong move up is simply a buy vacuum and a bull leg within a larger trading range. 
  • They want a strong bear leg to retest the trading range low (May low) to begin.
  • This week, they got a big bear bar testing the 20-week EMA.
  • Next week, they will need to create follow-through selling, closing below the 20-week EMA to increase the odds of a deeper pullback.
  • Previously, the bulls have had a tight bull channel since June. That means strong bulls.
  • They see the pullback this week simply as a test of the breakout point (trading range high; April high).
  • They want the 20-week EMA to act as a support and a reversal up from a higher low, completing the larger wedge pattern with the first two legs being August 10 and September 28.
  • At the very least, they expect at least a small sideways to up leg to retest the leg extreme high (Sept 28).
  • They hope to get a measured move based on the height of the 41-week trading range, which will take them to around $103.
  • Since this week’s candlestick was a big bear bar closing in the lower half, it is a sell bar for next week.
  • For now, odds slightly favor the market to still be in the sideways to down pullback phase.
  • Traders will see if the bears can create follow-through selling, closing below the 20-week EMA. Or will the market trade slightly lower, but stall around the 20-week EMA area?
  • The bear trend lines becoming progressively less steep also indicates a loss of momentum for the bears.
  • The market likely has flipped into Always In Long.

The Daily crude oil chart

Crude Oil Daily: PB but Bear Spike
  • The market traded lower for the week, closing far below the 20-day EMA.
  • Previously, we said that while the market continues to slightly favor sideways to up, the recent move up is slightly climactic and has lasted a long time. A minor pullback can begin at any moment. 
  • The pullback phase has begun and tested the April high which was the breakout point of the recent rally.
  • The bears want a reversal down from a large wedge pattern (Jul 13, Aug 10, and Sept 28, a smaller wedge (Sept 5, Sept 19, and Sept 28) and a final flag.
  • The move down is strong in the form of a bear spike (strong bear bars with little overlap).
  • That increases the odds of at least a small second leg sideways to down after a small pullback.
  • The bears hope to get a spike and channel down and for the market to have flipped into Always In Short.
  • The bulls got a strong rally from June in the form of a tight bull channel which lasted a long time.
  • They hope that the strong pullback this week is simply a sell vacuum test of the breakout point (April high).
  • They want the pullback to stall around the April high and form a higher low followed by another strong leg up, completing the larger wedge pattern with the first two legs being August 10 and September 28.
  • For now, odds slightly favor the market to still be in the sideways to down pullback phase, and for a second leg lower after a pullback.
  • The pullback should last at least TBTL (Ten Bars, Two Legs).
  • If the bears continue to create consecutive bear bars closing near their lows, it will increase the odds of the bear leg testing the May low to begin.

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