Market Overview: Crude Oil Futures
The weekly chart formed a Crude Oil wedge bear flag on the weekly chart. The bears will need to create sustained follow-through selling closing below the 20-week EMA to increase the odds of another leg lower. If the market trades lower, the bulls want a reversal from a wedge bull flag with the first two legs being January 3 and February 5.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bear bar closing near its low.
- Last week, we said that the market may still be in the sideways to up pullback phase. Until the bulls can create follow-through buying trading far above the January high, odds slightly favor at least a small sideways to down leg to retest the December low.
- This week traded slightly above last week’s high but reversed to close near its low by Friday.
- The bulls see the selloff to the December 13 low simply as a bear leg within a trading range.
- They want a reversal from a higher low major trend reversal (Dec 13), a wedge bull flag (Oct 6, Nov 16, and Dec 13) and a small double bottom bull flag (Jan 13 and Feb 5).
- They will need to create sustained follow-through buying above the 20-day EMA and the bear trend line to increase the odds of the bull leg beginning.
- If the market trades lower, they want a reversal from a wedge bull flag with the first two legs being January 3 and February 5.
- The bears see the recent sideways to up pullback as forming a wedge bear flag (Dec 26, Jan 29, and Feb 22).
- They also see a small double top (Jan 29 and Feb 22)
- They want the 20-week EMA and the bear trend line to act as resistance.
- They want another leg down to retest the prior leg low (Dec 13) and the trading range low (May low) after the current pullback.
- The bears will need to create sustained follow-through selling closing below the 20-week EMA to increase the odds of another leg lower.
- Since this week’s candlestick is a bear bar closing near its low, it is a sell signal bar for next week.
- For now, the sideways to up pullback phase may have ended if the bears can create follow-through selling next week closing below the 20-week EMA.
- Until the bulls can create follow-through buying trading far above the January high, odds slightly favor at least a small sideways to down leg to retest the December low. This remains true.
- Crude Oil is currently in an 81-week trading range. Traders will BLSH (Buy Low, Sell High) until there is a breakout with sustained follow-through buying/selling from either direction.
- Poor follow-through and reversals are the hallmarks of a tight trading range.
The Daily crude oil chart
- Crude Oil traded sideways to up but reversed to close near its low on Friday.
- Last week, we said that odds slightly favor the market to still be in the minor pullback (sideways to up) phase and traders will see if the bulls can create sustained follow-through buying or will the market stall around the January high area.
- This week tested the January high but stalled and reversed lower on Friday.
- The bulls see the move down to December 13 simply as a bear leg within a trading range.
- They got a reversal from a wedge pattern (Oct 6, Nov 16, and Dec 13) and a double bottom bull flag (Dec 13 and Feb 5).
- They hope to get a breakout above the January high followed by the beginning of the bull leg to retest the September high.
- The bulls will need to create consecutive bull bars closing near their highs, trading far above the January high to increase the odds of the bull leg beginning.
- If the market trades lower, they want a reversal from a wedge bull flag with the first two legs being December 13 and February 5.
- The bear sees the current pullback as forming a wedge bear flag (Dec 26, Jan 29, and Feb 22). The third leg up also formed a micro wedge (Feb 14, Feb 20, and Feb 22).
- They want a retest of the December low after the current pullback.
- If the market trades higher, they want a reversal from around the January high area or slightly above it.
- For now, the minor pullback (sideways to up) phase may have ended if the bears can create sustained follow-through selling next week, closing below the 20-day EMA.
- Odds slightly favor the 11-weeks sideways to up pullback to be minor and favor at least a small leg retesting the December low after the pullback. This remains true.
- Crude Oil remains in an 81-week trading range. Traders will BLSH (Buy Low, Sell High) in trading ranges until there is a breakout with sustained follow-through buying/selling.
- Most breakouts from a trading range fail 80% of the time. Odds slightly favor the trading range to continue.
- Poor follow-through and reversals are the hallmarks of a trading range.
- If the bulls can get a series of consecutive bull bars closing near their highs, trading far above January high, it can swing the odds in favor of the bull leg beginning.
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