Market Overview: Crude Oil Futures
The weekly chart formed a larger Crude Oil second leg down. The bears need to create follow-through selling to increase the odds of a deeper pullback. The bulls want a reversal from a double bottom bull flag and for the 20-week EMA to act as support.
Crude Oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bear bar closing above the middle of its range with a long tail below.
- Last week, we said that the odds slightly favor the market to still be in the sideways to up phase. Traders will see if the bulls can get another consecutive bull bar or will the market trade slightly higher but stall and reverse lower.
- This week broke below last week’s low but reversed to close above it, testing near the 20-week EMA.
- The bears got a larger second leg sideways to down this week.
- They want a reversal down from a double-top bear flag with the November 2022 high and a lower high major trend reversal (Oct 23).
- They hope that the strong move up (from Jun to Sept) is simply a buy vacuum and a bull leg within a larger trading range.
- They will need to create consecutive bear bars closing near their lows trading far below the 20-week EMA to increase the odds of lower prices.
- Previously, the bulls had a tight bull channel from June to September.
- They see the current pullback forming a double bottom bull flag (Oct 6 and Oct 25)
- They want the 20-week EMA to act as a support and another strong leg up, completing the larger wedge pattern with the first two legs being August 10 and September 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 was a bear bar closing above the middle of its range with a long tail below, it is a weak sell signal bar.
- It is also trading above the 20-week EMA which could be a potential support.
- Traders will see if the bears can create follow-through selling or if will they fail to do so like the first leg down (Oct 6).
- The market is also forming a triangle which is a breakout mode pattern.
- For now, while the market can still trade sideways to down for a while more, odds slightly favor the market to still be Always In Long.
The Daily crude oil chart
- Crude Oil traded lower early in the week followed by sideways trading range from Wednesday onwards.
- Last week, we said that the odds slightly favor Crude Oil to still be in the sideways to up phase. If the move up continues to be weak, odds are we will see the bears attempt a larger second leg sideways to down within 1-3 weeks.
- The bear got the larger second leg sideways to down this week.
- They see the move up from October 6 simply as a retest of the prior trend extreme (Sept 28).
- They want the market to stall below the September 28 high and reverse from a lower high major trend reversal.
- They also want a reversal down from a smaller wedge pattern (Oct 9, Oct 16, and Oct 20). The bears got what they wanted.
- They see the sideways trading range from Wednesday to Friday as a pullback and want another leg down to retest the October 6 low.
- 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 current move down is simply forming a double bottom bull flag (Oct 6 and Oct 25).
- They want another strong leg up, completing the larger wedge pattern with the first two legs being August 10 and September 28.
- They will need to create consecutive strong bull bars to increase the odds of retesting and break out above the September 28 high.
- For now, while Crude Oil could still trade a little lower, odds slightly favor the market to still be in the sideways to up phase.
- Traders will see if the bears can create follow-through selling or will the current leg down lacks sustained follow-through selling like the first leg down (Oct 6).
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