Market Overview: Crude Oil Futures
The weekly chart formed a Crude Oil first pullback below the 7-bar bull microchannel. The bears need to create follow-through selling to increase the odds of the bear leg beginning. The bulls want a retest of the August 10 high followed by a breakout and a measured move up.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bear bar with a long tail below closing around the middle of its range.
- Last week, we said that the move up had lasted a long time and is slightly climactic. A minor pullback can begin at any moment.
- This week traded below last week’s low but reversed to close above it.
- The bulls got a retest of the trading range high (April high).
- They want a strong breakout above the trading range high and a measured move based on the height of the 39-week trading range.
- The prior move up was in a 7-bar bull microchannel which means persistent buying. That increases the odds that the first pullback will be minor.
- The bears want a reversal down from around the trading range high and the beginning of the bear leg to test the trading range low.
- They hope that the recent strong move up is simply a buy vacuum test of the trading range high.
- The problem with the bear’s case is that they have not been able to create credible selling pressure (bear bars with follow-through) since June.
- The bears will need to create follow-through selling next week to increase the odds of the bear leg beginning.
- This week’s bear bar with a long tail below is a weaker sell signal bar.
- It is also following a 7-bar bar bull microchannel. It is not a strong sell setup. There may be buyers below the first pullback from such a strong bull microchannel.
- The bears will need a strong reversal bar or at least a micro double top before they would be willing to sell more aggressively.
- While the prior move up is strong, it could still only be a bull leg within a trading range.
- If the market continues to stall around the trading range high, we may begin to see more profit-taking from the bulls.
- The market is in a 39-week trading range. Traders will BLSH (Buy Low, Sell High) in trading ranges until there is a strong breakout from either direction with follow-through buying/selling.
The Daily crude oil chart
- The market traded sideways to down for the week. Thursday traded slightly lower but reversed into a bull bar. Friday was a follow-through bull bar closing above the 20-day exponential moving average.
- Last week, we said that move up has lasted a long time and is slightly climactic. A minor pullback can begin at any moment.
- The move up since June 28 is in a tight bull channel.
- The bears hope that the tight channel up is simply a buy vacuum testing the trading range high.
- They want the market to reverse lower from around the 39-week trading range high and from a small wedge pattern (Aug 2, Aug 7, and Aug 10).
- They hope that Thursday and Friday were simply a pullback and want another leg down trading below the 20-day exponential moving average.
- They will need to create consecutive bear bars closing near their lows to increase the odds of a reversal down.
- The bulls got a retest of the 39-week trading range high.
- The move-up is in a tight bull channel. That means strong bulls.
- They want a strong breakout above the 39-week trading range and a measured move up based on the height of the trading range.
- Because of the strong leg up, the current pullback would likely be minor.
- Odds slightly favor at least a small retest of the prior leg extreme (Aug 10).
- Crude Oil has been trading within a 39-week trading range.
- Traders will BLSH (Buy Low, Sell High) in trading ranges until there is a strong breakout from either direction with follow-through buying/selling.
- For now, traders will see if the bulls can create the retest of the August 10 high or will the bears get another leg down instead.
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