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Crude Oil Formed a Lower High

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Market Overview: Crude Oil Futures

Crude oil formed a lower high after testing the top of the triangle. Bears need to create a strong bear entry bar with sustained follow-through selling to increase the odds of a breakout below the triangle. Bulls want any pullback to form a higher low relative to the May 6 or April 17 low.

Crude oil futures

The Weekly crude oil chart

Crude Oil Weekly - Triangle, No BO, Lower High, Crude Oil Formed a Lower High
  • This week formed a bear bar, closing in its lower half with a small tail below.
  • Last week, we said traders would watch whether bulls could generate a strong breakout above the bear trend line or whether the market would stall below the April 30 high, forming another lower high, followed by a pullback to the middle of the range.
  • The market traded higher to test the bear trend line but formed a lower high and reversed into a bear bar.
  • Bulls want a breakout above the triangle to retest the March 9 high and continue the trend.
  • They want any pullback to form a higher low relative to the May 6 or April 17 low.
  • Bulls need consecutive bull bars closing near their highs and breaking strongly above the triangle to increase the odds of trend resumption.
  • Bears see the current move as a retest of the prior high and want the bear trend line to act as resistance.
  • They want a reversal from a wedge top (March 9, April 7, and April 30) and a lower high major trend reversal.
  • Bears see this week’s bear bar as a sell setup bar.
  • Bears need to create a strong bear entry bar with sustained follow-through selling to increase the odds of a breakout below the triangle.
  • Crude oil is forming a broad contracting triangle, with the market contained within two converging trend lines.
  • The market tested the top of the triangle this week but could not break out above it.
  • The market remains in a trading range with overlapping price action. Traders may continue to Buy Low, Sell High (BLSH) — buying near the lower third and selling near the upper third of the range — until there is a strong breakout with follow-through.
  • The middle of the range can act as an area of balance and a magnet.
  • Traders will watch whether bears can generate a strong bear entry bar to test the bull trend line or whether the market trades slightly lower but stalls around the middle of the range instead.
  • External factors, such as developments in the Middle East, could accelerate or reverse the current move.

The Daily crude oil chart

Crude Oil Daily - Triangle, Lower High, Higher Low
  • The market traded higher to test the bear trend line followed by a retest of the 20-day EMA afterward.
  • Last week, we said traders would watch whether bulls could generate a strong breakout above the triangle or whether the market would stall at a lower high, followed by a retest of the bottom of the triangle.
  • Bulls want a breakout above the triangle, followed by a retest of the March 9 high to resume the trend.
  • Bulls see a large wedge bull flag (March 23, April 17, and May 6) forming.
  • Bulls want the 20-day EMA or the bull trend line to act as support.
  • If the market trades lower, bulls want it to form a higher low relative to the May 6 or April 17 low.
  • Bulls need consecutive bull bars closing near their highs and breaking strongly above the triangle to increase the odds of trend resumption.
  • Bears see the recent move (May 18) as a retest of the prior high and want the top of the triangle to act as resistance.
  • They want a reversal from a wedge top (March 9, April 7, and April 30) and a lower high major trend reversal.
  • Bears want a retest and breakout below the bottom of the triangle.
  • Bears need consecutive bear bars closing near their lows and breaking far below the bull trend line to demonstrate control.
  • Crude oil is forming a broad contracting triangle with lower highs and higher lows.
  • The market remains in a trading range with overlapping price action. Traders may continue to Buy Low, Sell High (BLSH) — buying near the lower third and selling near the upper third of the range — until there is a strong breakout with follow-through.
  • The middle of the range is an area of balance and often acts as a magnet.
  • Traders will watch whether bears can generate follow-through selling breaking below the 20-day EMA to test the bottom of the triangle or whether the market stalls around the 20-day EMA or the middle of the trading range instead.
  • External factors, such as developments in the Middle East, could accelerate or reverse the current move.

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