Market Overview: Crude Oil Futures
The monthly chart formed a Crude Oil lower high in April. The bears want April to reverse back below the 20-month EMA and form a second leg sideways to down to retest the December low from a lower high major trend reversal (Apr 12). The bulls hope that the current sideways-to-down move is simply a pullback and want at least a small second leg sideways to up to retest the April 12 high.
Crude oil futures
The Monthly crude oil chart
- The April monthly Crude Oil candlestick was a bear doji with a long tail above.
- Last month, we said that the odds slightly favor the market to trade at least a little higher. Traders will see if the bulls can continue creating follow-through buying breaking above the bear trendline to retest the September high.
- The market traded higher in the first half of the month but reversed to trade sideways to down from mid-month onward.
- Previously, the bears got a reversal from a double top bear flag (Nov 7 and Sept 28) and a lower high major trend reversal (Sept 28) but were not able to create follow-through selling below the 20-month EMA (Dec 13).
- They want April to reverse back below the 20-month EMA and form a second leg sideways to down to retest the December low from a lower high major trend reversal (Apr 12).
- They want the bear trend line to act as resistance. So far this is the case.
- The next target for the bears is the 20-month EMA.
- The bulls see the pullback (Sept to Dec) simply as a deep pullback and hope to get a retest of the September high.
- They got a reversal from a higher low major trend reversal (December) and a double bottom bull flag (May 4 and Dec 13).
- While the market traded higher in April, the bulls were not able to get a strong breakout above the bear trend line. The bull leg formed a lower high.
- The bulls hope that the current sideways-to-down move is simply a pullback and want at least a small second leg sideways to up to retest the April 12 high.
- They want the 20-month EMA to act as support.
- Since April was a bear doji bar closing near its low, it is a sell signal bar for May.
- Odds slightly favor the market to trade at least a little lower, which it has done.
- Traders will see if the bears can create a follow-through bear bar closing below the 20-month EMA.
- If May’s candlestick is a big bear bar closing near its low and below the 20-month EMA, the odds of a retest of the December low will increase.
- The market is in a large trading range (Trading range high: September 29, Trading range low: May 4).
- Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction with sustained follow-through buying/selling.
- The 20-month EMA is around the middle of the large trading range. It can be a magnet and an area of balance.
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a big bear bar closing near its low.
- Last week, we said that traders will see if the bulls can get a follow-through bull bar. The market is trading near the upper third of the trading range, which is the sell zone of the trading range traders.
- This week traded lower and closed below the 20-week EMA. The bulls were not able to get a follow-through bull bar.
- The bears see the bull leg as forming a wedge bear flag (Dec 26, Jan 29, Apr 12). They also see an embedded wedge in the third leg up (Jan 3, Mar 19, and Apr 12).
- They see last week simply as a pullback and want at least a small second leg sideways to down. They want a failed breakout above the bull channel. They got what they wanted.
- They will need to create consecutive bear bars closing near their lows and trading below the 20-week EMA to convince traders that they are back in control.
- Since this week closed below the 20-week EMA, the bears need to create a follow-through bear bar to increase the odds of the bear leg beginning.
- The bulls got a weak bull leg with overlapping candlesticks trading above the 20-week EMA testing the upper third of the large trading range.
- They want a retest of the September 28 high after the current pullback.
- If the market trades lower, the bulls want the 20-week EMA or the bull trend line to act as support.
- They want at least a small second leg sideways to up to retest the April 12 high even if it forms a lower high.
- Since this week’s candlestick is a bear bar closing near its low, it is a sell signal bar for next week.
- However, the market is trading at a potential support area (the 20-week EMA and the bull trend line).
- Traders will see if the bears can get a strong breakout below the bear trend line and a follow-through bear bar closing below the 20-week EMA.
- The market was trading near the upper third of the trading range, which is the sell zone of the trading range traders.
- Traders will see if sellers appear around this area aggressively and if not, higher up in the trading range near the September high. So far, we can see increased selling pressure.
- The bear leg could be underway if the bears can create a strong breakout and sustained follow-through selling.
- The market is in a large trading range (Trading range high: September 29, Trading range low: May 4).
- Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction with sustained follow-through buying/selling.
- Poor follow-through and reversals are hallmarks of a trading range.
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