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Crude Oil No Bull Follow-through, 50% PB

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Market Overview: Crude Oil Futures

Crude oil no bull follow-through after last week’s surprise big bull bar. Bulls see this simply as a 50% pullback following last week’s climactic rally and want at least a small second leg sideways to up.

Bears want a retest of Sept low. If next week closes as a bear follow-through bar especially if it is strong, increases the odds of a retest of Sept low. However, if next week trades lower, but reverses to close with a bull body and a long tail below instead, the odds of a second leg sideways to up would increase. 

Crude oil futures

The Weekly crude oil chart

Crude Oil No Bull Follow-through on Weekly Chart
  • This week’s candlestick on the weekly Crude Oil chart was a big bear bar closing near the low.
  • Last week, we said that the odds favor at least slightly higher prices. Traders will see if the bulls can create a follow-through bull bar. If next week trades higher but reverses to close with a bear body instead, the odds of a retest of the September low would increase.
  • While the move down since June was in a tight bear channel, the candlesticks had a lot of overlapping price action. The bears are not yet as strong as they could have been.
  • The bears want at least a small second leg sideways to down retesting the September low after a pullback.
  • They want a reversal lower from a double top bear flag with August 30 or July 29 high.
  • The bears need a follow-through bear bar next week to increase the odds of re-testing the Sept low.
  • Bulls want a reversal from a wedge bull flag (June 22, July 14 and Sept 26) and a lower low major trend reversal.
  • The bulls will need to create consecutive bull bars closing near their highs breaking far above the bear trend line, and the 20-week exponential moving average, to convince traders that the correction may be over.
  • They failed to get follow-through buying following last week’s big bull bar and Crude Oil closed below the 20-week exponential moving average.
  • Bulls hope that this week was simply a 50% pullback from the rally off the Sept low, and a breakout pullback above the bear trendline. They want at least a small second leg sideways to up. 
  • They want next week to close with a bull body even though it may trade slightly lower first.
  • The 20-week exponential moving average remains resistance above.
  • Since this week was a bear bar closing near the low, odds favor next week to trade at least slightly below this week’s low.
  • Traders will see if the bears can create a follow-through bear bar. If they do, especially if it is strong, it increases the odds of a retest of Sept low.
  • However, if next week trades lower, but reverses to close with a bull body and a long tail below instead, the odds of a second leg sideways to up would increase.

The Daily crude oil chart

Crude Oil Daily Chart 50% Pullback of Rally from Sept Low
  • Monday opened slightly higher and traded lower for the rest of the week with a pullback on Thursday.
  • The bulls want a reversal from a wedge pattern (June 22, July 14 and Sept 26) and a lower low major trend reversal.
  • The 20-week exponential moving average and bear trend line are resistances above.
  • Last week, the bulls created consecutive bull bars closing near their highs breaking far above the resistances. This was the strongest spike up since the selloff in June.
  • The bulls see this week simply as a 50% pullback from the Sept low, and want at least a small second leg sideways to up.
  • If Crude Oil continues to trade lower next week, the bulls want a higher low major trend reversal higher.
  • While the move down since June was in a tight bear channel, there was a lot of overlapping price action.
  • That means the bears are not yet as strong as they could have been.
  • The bears want a 2-legged sideways to down retesting the Sept low after the pullback.
  • They want a reversal lower from a double-top bear flag with August 30 or July 29 high.
  • They hope that the first leg down has started this week. They will need to create follow-through selling next week to increase the odds of a re-test of Sept low.
  • For now, the bulls still have at least a 50% chance of at least a small second leg sideways to up to retest the Oct 7 high.
  • However, if the bears continue to create consecutive bear bars closing near their lows next week, the odds of a retest of Sept low increases.

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