Crude Oil Major Lower High

Market Overview: Crude Oil Futures

The market formed a Crude oil major lower high this week (January 14). Bulls need consecutive strong bull bars closing well above the 20-week EMA and the bear trend line to show they are regaining control. Bears want another strong leg down from a large wedge bear flag (July 30, September 26, and January 14).

Crude oil futures

The Weekly crude oil chart

• This week’s Crude Oil candlestick was a bull doji closing in its lower half, with a long tail above, and closing slightly above the 20-week EMA.
• Last week, we said traders would watch whether bulls could produce a strong follow-through bull bar closing above the 20-week EMA and the bear trend line, or whether the 20-week EMA and the bear trend line would continue to act as resistance.
• The market traded higher to test the October high but reversed sharply down on Thursday, closing far off the week’s high.
• Bulls see the December 16 selloff as a large wedge bull flag (August 13, October 20, and December 16) and a bear leg within a broader trading range.
• They see the market forming a large higher low major trend reversal relative to the April 9 low, and a smaller higher low major trend reversal (January 7 low).
• The long tail above this week’s candlestick indicates that bulls are not yet strong.
• If the market trades lower, bulls want a higher low relative to the January 7 low, forming another higher low major trend reversal following this week’s break of several bear trend lines.
• Bulls need consecutive strong bull bars closing well above the 20-week EMA and the bear trend line to show they are regaining control.
• Bears created three sideways-to-down legs (August 13, October 20, and December 16), forming a wedge pattern.
• They see this week as a pullback forming another major lower high relative to the September 26 high and a double top bear flag (October 24 and January 14).
• They want another strong leg down from a large wedge bear flag (July 30, September 26, and January 14).
• Bears need consecutive strong bear bars breaking below the 20-week EMA to increase the odds of another strong leg down.
• Bears want the 20-week EMA and the bear trend line to act as resistance.
• Crude Oil remains in a large trading range.
• Until there is a clear breakout with sustained follow-through, traders will likely continue to Buy Low, Sell High (BLSH), buying near the lower third and selling near the upper third of the range.
• The middle of the trading range can act as an area of balance and a magnet, around the $62 area; price tested it this week before pulling back sharply.
• For now, traders will watch whether bulls can produce more follow-through buying above the 20-week EMA and the bear trend line.
• Or whether bears can produce strong bear bars reversing below the 20-week EMA instead.
• Poor follow-through and frequent reversals are hallmarks of a trading range environment.

The Daily crude oil chart

• The market traded higher in the first half of the week, testing the October high, followed by a deep pullback on Thursday.
• Last week, we said traders would watch whether bulls could produce strong follow-through buying trading well above the 20-day EMA and the bear trend line, or whether the market would stall near the 20-day EMA or the bear trend line instead.
• Bulls see the recent price action as a large wedge bull flag (August 13, October 20, and December 16) and a large higher low major trend reversal relative to the April 9 low.
• They see the January 7 low as forming a smaller higher low major trend reversal.
• The rally this week broke several bear trend lines, indicating buying pressure, but the deep pullback shows bulls are not yet decisively strong.
• Bulls see the January 15 move as a breakout pullback test of the December 26 breakout point.
• Bulls need consecutive strong bull bars trading well above the 20-day EMA and the bear trend line to show they are firmly in control.
• They want the 20-day EMA to act as support.
• If the market trades lower, bulls want the January 7 low area to act as support, forming another higher low major trend reversal.
• Bears created three sideways-to-down legs (August 13, October 20, and December 16), forming a wedge pattern.
• They see the current move as a pullback and want the October high to act as resistance, forming another major lower high relative to the September 26 high, which remains the case so far.
• Bears want a reversal from a double top bear flag (October 24 and January 14).
• Bears need consecutive strong bear bars breaking well below the 20-day EMA to increase the odds of another strong leg down.
• The market remains in a large trading range.
• Until there is a clear breakout with sustained follow-through, traders will likely continue to Buy Low, Sell High (BLSH), buying near the lower third and selling near the upper third of the range.
• The middle of the trading range, around the $62 area, can act as an area of balance and a magnet. The market tested this area and then pulled back deeply this week.
• For now, traders will watch whether bulls can produce more follow-through buying above the 20-day EMA and the bear trend line. If the market trades lower, they will watch whether the market stalls around the 20-day EMA area or the January 7 low area.
• Or whether bears can produce strong bear bars trading far below the 20-day EMA instead.
• Poor follow-through and frequent reversals are hallmarks of a trading range environment.

---

Market analysis reports archive

You can access all weekend reports on the Market Analysis page.

---