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Crude Oil Has Formed a Triangle Pattern

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Market Overview: Crude Oil Futures

Crude oil has formed a triangle pattern on the weekly chart over the past 13 weeks. Bulls want any pullback to form a higher low relative to the May 6 or April 17 lows. Bears see this week as a pullback and want a second leg sideways to down following the first leg down from May 18 to May 29.

Crude oil futures

The Weekly crude oil chart

Crude Oil Weekly - Triangle, Middle of Trading Range, Crude Oil Has Formed a Triangle Pattern
  • This week formed a bull doji closing in its lower half with a long upper tail.
  • Last week, we said traders would watch whether bears could generate strong follow-through selling, breaking below the bottom of the triangle and the 20-week EMA, or whether the market would trade lower but stall around the 20-week EMA or the April 17 low area instead.
  • The market gapped up and traded higher during the first half of the week, followed by a pullback.
  • Bulls see the recent move (May 29) as a pullback forming a large double bottom bull flag with the April 17 low or a wedge bull flag (April 17, May 6, and May 29).
  • Bulls want any pullback to form a higher low relative to the May 6 or April 17 lows.
  • If the market trades lower, bulls want the 20-week EMA or the April 17 low to act as support.
  • 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 bear trend line to act as resistance.
  • Bears want a reversal from a wedge top (April 7, April 30, and May 18) and a lower high major trend reversal.
  • Bears see this week as a pullback and want a second leg sideways to down following the first leg down from May 18 to May 29.
  • Bears need to create consecutive strong bear bars breaking strongly below the triangle and the 20-week EMA to increase the odds of a reversal.
  • Crude oil is forming a broad contracting triangle, with the market contained within two converging trend lines.
  • The trading range is becoming tight, which means the market is in breakout mode. Traders expect a breakout within a few weeks. The first breakout can fail about half the time.
  • 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 second leg sideways to down, breaking below the bottom of the triangle and the 20-week EMA.
  • Or whether the market stalls and tests the top of the triangle 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 - Contracting Triangle, Lower High, Higher Low
  • The market traded higher in the first half of the week, testing the 20-day EMA, followed by a pullback.
  • Previously, we said traders would watch whether bears could generate follow-through selling, breaking below the 20-day EMA to test the bottom of the triangle, or whether the market would stall around the 20-day EMA or the middle of the trading range instead.
  • 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 (April 17, May 6, and May 29) and a double bottom bull flag (May 6 and May 29) 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 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.
  • Bears want a reversal from a wedge top (April 7, April 30, and May 18) and a double top bear flag (April 30 and May 18).
  • Bears want a retest and breakout below the bottom of the triangle.
  • Bears need consecutive bear bars closing near their lows and breaking decisively below the bull trend line to demonstrate control.
  • Crude oil is forming a broad contracting triangle with lower highs and higher lows.
  • The trading range is becoming tight, which means the market is in breakout mode. Traders expect a breakout within a few weeks. The first breakout can fail about half the time.
  • 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 strongly below the bottom of the triangle.
  • Or whether the market stalls and tests the top of the triangle instead.
  • External factors, such as developments in the Middle East, could accelerate or reverse the current move.

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