Market Overview: Crude Oil Futures
The Crude oil futures market is in a 9-week trading range. This week was a breakout above the inside bull bar, but Crude Oil is sitting just under the 9-week trading range high, 20-week exponential moving average and bear trend line. The bulls will need to break far above these resistances to convince traders of higher prices. Crude Oil is in a small trading range. Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a small bull doji.
- Last week, we said that the odds favor a breakout above the inside bull bar.
- While this week broke above last week’s high, it was not a strong breakout and closed slightly below the 20-week exponential moving average.
- Previously, the bears got a reversal lower from a double-top bear flag (October 10 and November 7) breaking below the September low. However, they failed to get follow-through selling.
- Bears want another leg down breaking below the December low, completing the wedge pattern (the first two legs being Sept 26 and Dec 9).
- They hope that the last 9 weeks were simply forming a double-top bear flag (Dec 1 and Jan 18).
- The 20-week exponential moving average and bear trend line remains as resistances above.
- The bulls want a failed breakout below the September low and the bull trend line.
- They got another leg higher to retest the December high from a higher low major trend reversal (Jan 5).
- The bulls need to create follow-through buying far above the 9-week trading range high and bear trend line to increase the odds of higher prices.
- This week was a breakout from the inside bull bar. The first breakout from an inside bar can fail 50% of the time.
- Since this week was a small bull doji, it is a weaker buy signal bar, especially since it is sitting just under the 9-week trading range high, bear trend line and the 20-week exponential moving average.
- Traders will see if the bulls can create follow-through buying, breaking far above the trading range high, or if next week trades slightly higher but stalls and reverses lower again.
- The last 9 candlesticks are overlapping sideways. That means Crude Oil is in a small trading range.
- Poor follow-through and reversals are more likely within a trading range. Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction.
- Crude Oil could be forming a trending trading range.
The Daily crude oil chart
- Crude oil traded sideways to up for the week.
- Last week, we said that the odds slightly favor Crude Oil to trade at least a little higher.
- The bulls want a failed breakout below the September – November trading range and the major bull trend line.
- They want a reversal higher from a wedge bottom (July 14, Sept 26 and Dec 9) and a higher low major trend reversal (Jan 5).
- They see the move down from January 3 simply as a retest of the December low.
- The move up since January 5 is in a tight bull channel. That means persistent buying.
- However, Crude Oil is in a 9-week trading range. Until the bulls can break far above the top of the trading range and the bear trend line, the current move up could simply be a bull leg within a trading range.
- The bears got a reversal lower from a double-top bear flag (Dec 1 and Dec 27) and a small double top (Dec 27 and Jan 3).
- Despite the strong leg down, they were not able to create a small second leg sideways to down.
- They hope that the current pullback (bounce) will stall around January 3 high and form a double-top bear flag (Jan 3 and Jan 18) or wedge bear flag (Dec 1, Jan 3 and Jan 18).
- They want a retest and breakout below the December low forming the wedge pattern with the first two legs being September 26 and December 9.
- While Wednesday was a reversal bar, the bears were not able to create follow-through selling.
- The problem with the bear’s case is that the move up since January 5 low is in a tight bull channel. That means persistent buying.
- The bears will need at least a strong reversal bar or a micro double top before they would be willing to sell aggressively.
- For now, odds slightly favor Crude Oil to trade at least a little higher.
- Traders will see if the bulls can break far above the December high and the bear trend line, or if Crude Oil trades slightly higher but stalls and reverses lower.
- Crude Oil formed a trading range in the last 9 weeks.
- Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction from this small trading range.
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