Market Overview: Crude Oil Futures
The market formed a Crude Oil 7-bar bull microchannel on the weekly chart. That means strong bulls and increases the odds that the first pullback will be minor. The bears want the market to stall around the 38-week trading range high and for the bear leg to begin.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bull doji closing slightly above the middle of its range.
- Last week, we said that odds slightly favor the market to trade at least a little higher and traders will see if the bulls can continue to create follow-through buying or will next week trade slightly higher but stall around the 37-week trading range high area.
- This week traded higher but is stalling around April high area.
- The bulls got a reversal from a higher low major trend reversal (June 12) and a micro wedge (May 31, Jun 12, and June 28).
- They also 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 38-week trading range.
- The move up is 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 area and the beginning of the bear leg to test the trading range low.
- They hope that the current move up is simply a buy vacuum within a trading range.
- The problem with the bear’s case is that they have not been able to create credible selling pressure (bear bars) since June.
- Because of the strong leg up, the bears will need a strong reversal bar or at least a micro double top before they would be willing to sell more aggressively.
- This week’s bull doji is not a strong sell signal bar. It is a weak buy signal bar.
- Buying at the top of a trading range is not an ideal setup.
- While the current move up is strong, it could still only be a bull leg within a trading range.
- It has also lasted a long time and is slightly climactic. A minor pullback can begin at any moment.
- If the market continues to stall around the trading range high, we may begin to see some profit-taking from the bulls.
- The market is in a 38-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 up for the week. Tuesday traded lower but reversed into a bull bar closing near its high.
- Thursday was an outside bear bar but there was no follow-through selling on Friday.
- Previously, we said that the odds slightly favor the market to still be in the sideways to up phase.
- The move up since June 28 is in a tight bull channel with not much-sustained follow-through selling.
- The bears hope that the tight channel up is simply a buy vacuum within the trading range.
- They want the market to reverse lower from around the 38-week trading range high and from a small wedge pattern (Aug 2, Aug 7, and Aug 10).
- 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 38-week trading range high.
- The move-up is in a tight bull channel. That means strong bulls.
- They want a strong breakout above the 38-week trading range and a measured move up based on the height of the trading range.
- Because of the strong leg up, the market may still be in the sideways to up phase.
- However, the move up has lasted a long time and is slightly climactic. A minor pullback can begin at any moment.
- If there is a pullback, the odds slightly favor at least a small retest of the current leg extreme (now August 10) after the pullback.
- Crude Oil has been trading within a 38-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 continue to create follow-through buying or will the market stall around the current levels (trading range high area) and the bulls start taking profits.
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