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Crude Oil Low 4 Sell Signal Triggered

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Market Overview: Crude Oil Futures

The Crude oil futures triggered the Low 4 sell signal on the weekly chart by trading below last week’s low. The bears will need to create follow-through selling to increase the odds of a retest and breakout below the 16-week trading range. The bulls need to break far above the 16-week trading range high and 20-week exponential moving average to increase the odds of higher prices. Traders will BLSH (Buy Low, Sell High) until there is a breakout with follow-through from either direction. 

Crude oil futures

The Weekly crude oil chart

Crude Oil Weekly: Poor Follow-through buying, Low 4 sell signal
  • This week’s candlestick on the weekly Crude Oil chart was an outside bear bar with a prominent tail below.
  • Last week, we said that odds slightly favor Crude Oil to trade at least a little higher and traders will see if the bulls can create a strong follow-through bull bar, or will the market trade slightly higher but stalls around the trading range high and the 20-week exponential moving average again.
  • This week traded slightly higher but stalled around the 20-week exponential moving average and reversed into an outside bear bar.
  • The bulls want a failed breakout below the September low and the bull trend line. 
  • They triggered the H4 (High 4) buy entry last week but could not get follow-through buying.
  • They want a retest and breakout above the 16-week trading range high and 20-week exponential moving average.
  • The bulls need to break far above these resistances with follow-through buying to increase the odds of higher prices.
  • The bears want the market to stall around the trading range high and the 20-week exponential moving average.
  • They triggered the L4 (Low 4) sell signal this week by trading below last week’s low. 
  • They will need to create strong follow-through selling next week to increase the odds of a breakout below the 16-week trading range.
  • The last 16 candlesticks are overlapping sideways. That means Crude Oil is in a trading range. 
  • Poor follow-through and reversals are more likely within a trading range. 
  • Traders will BLSH (Buy Low, Sell High) until there is a breakout with follow-through from either direction. 
  • Since this week was a bear bar with a prominent tail below, it is a sell signal bar for next week albeit a slightly weaker one.
  • Odds slightly favor Crude Oil to trade at least a little lower.
  • Traders will see if the bears can create a strong follow-through bear bar, or will next week trades slightly lower but stall and close with a bull body or a long tail below.

The Daily crude oil chart

Crude Oil Daily: Trading Range, Triangle, Poor FT
  • Crude Oil traded slightly above last week’s high but reversed lower from around the February high. Friday traded lower but reversed into a bull bar closing near its high.
  • Previously, we said that Crude Oil is in a trading range and traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction. 
  • The bears got a reversal lower from a double top bear flag (Feb 13 and Mar 7) but have not broken below the February low.
  • This week’s reversal triggered the larger L4 (Low 4) sell signal. 
  • The bears will need to create strong follow-through selling far below the February low to convince traders that a breakout below the 16-week trading range is underway.
  • They want a breakout below the December low followed by a measured move down using the height of the 16-week trading range.
  • They need to create strong consecutive bear bars closing near their lows to increase the odds of lower prices.
  • If Crude Oil trades higher, they want it to stall around the trading range high and reverse lower again.
  • The bulls want a failed breakout below the September – November trading range and the major bull trend line.
  • From February 22 low, they got a reversal up to retest February high but did not get sustained follow-through buying.
  • They have broken the bear trend line by trading sideways.
  • If Crude Oil breaks below the December low, they hope that the 16-week trading range will be the final flag of the move down.
  • For now, Crude Oil remains in a 16-week trading range. Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction. 
  • Poor follow-through and reversals are more likely within a trading range.
  • Crude Oil formed a triangle pattern and is in breakout mode.
  • Markets have inertia and tend to continue to do what they have been doing. 
  • Traders should be prepared for breakouts to fail unless there is strong follow-through price action following the breakout.

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