Crude Oil Bears Need Follow-through Selling

Market Overview: Crude Oil Futures

The Crude oil bears need follow-through selling breaking below the October 20 low to increase the odds of another strong leg down. Bulls see the current move as a retest of the prior low (Nov 25) and want it to form a small double bottom (Nov 25 and Dec 11) and a higher low major trend reversal.

Crude oil futures

The Weekly crude oil chart

• This week’s Crude Oil candlestick was a big bear bar closing in its lower half, with a small tail below.
• Last week, we said traders would watch whether bulls could generate additional follow-through buying closing above the 20-week EMA and testing the October 24 high, or whether the market would stall around the 20-week EMA with sellers appearing above the 6-bar bear microchannel instead.
• The market failed to break above the 20-week EMA, and sellers appeared above the 6-bar bear microchannel.
• Bulls view the October 20 selloff as a large two-legged bear leg within a trading range, followed by a higher low major trend reversal on November 25.
• They see the current move as a retest of the prior low (Nov 25) and want it to form a small double bottom (Nov 25 and Dec 11).
• Bulls need consecutive strong bull bars closing far above the 20-week EMA and the bear trendline to show they are taking control.
• Bears got a second leg sideways to down on November 25, retesting the October 20 low from a large wedge bear flag (Jul 30, Sep 26, Oct 24).
• The move, while persistent, had overlapping ranges, a sign that bears are still not strong.
• Bears need consecutive strong bear bars breaking below the October 20 low to increase the odds of another strong leg down.
• If the market trades higher, bears want the 20-week EMA and the bear trendline to hold as resistance.
• Crude Oil remains in a large trading range.
• Traders will likely continue to Buy Low, Sell High — buying near the lower third and selling near the upper third — until there is a clear breakout with sustained follow-through.
• The retest of the October low (Nov 25 and Dec 11), despite its persistence, showed overlapping bars, reinforcing that bears are not yet decisively in control.
• Buyers may appear around the lower third of the trading range.
• Traders will watch whether bears can create follow-through selling closing below the October 20 low, or whether the market stalls around the October 20 or November 25 low area and then retests the 20-week EMA and the bear trendline instead.
• Poor follow-through and frequent reversals remain hallmarks of a trading range environment.

The Daily crude oil chart

• The market traded sideways to down for the week, remaining below the 20-day EMA.
• Last week, we said traders would watch whether bulls could generate more follow-through buying, breaking far above the 20-day EMA and the bear trendline to test the October 24 high, or whether the market would form another lower high and evolve into a larger wedge bear flag, with the first two legs on Jul 30 and Sep 26, instead.
• Bulls see the current pullback as forming a complex bull flag that began on October 24 and want a higher low major trend reversal.
• They view the current move as a retest of the prior leg low (Nov 25) and want a small double bottom (Nov 25 and Dec 11).
• Bulls need consecutive strong bull bars trading well above the 20-day EMA and the bear trendline to show they are regaining control.
• Bears see the recent move as a small two-legged pullback (Dec 1 and Dec 5) and want it to form a lower high. So far, this is the case.
• Bears want a strong leg down to test the trading range low.
• Bears must produce consecutive strong bear bars breaking far below the October 20 low to increase the odds of another strong leg down.
• The market remains in a large trading range.
• Traders will continue to Buy Low, Sell High until a clear breakout with sustained follow-through appears — buying near the lower third and selling near the upper third.
• The leg down since the October 24 high had overlapping ranges, showing bears are not yet decisively strong.
• Buyers may appear near the lower third of the trading range.
• For now, traders will watch whether bears can generate more follow-through selling, breaking below the November 25 and October 20 lows, or whether the market stalls around those levels instead.
• Poor follow-through and frequent reversals continue to define a trading-range environment.

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