Market Overview: Crude Oil Futures
The Crude oil futures continue to trade lower in a tight bear channel. However, there is a lot of overlapping price action on the weekly chart (crude oil no follow-through) which means the bears are not yet as strong as they could have been.
The bears failed to get follow-through selling following last week’s strong breakout. The bulls will need to create consecutive bull bars breaking far above the bear trend line to convince traders that the pullback is over. The bear trend line and 20-week exponential moving average are resistances above.
Crude oil futures
The Monthly crude oil chart
- The September monthly Crude Oil candlestick was a bear bar with a prominent tail below.
- It is the 4th consecutive bear bar since the June reversal. The move down is in a tight bear channel. That means strong bears.
- Odds are the bears will get at least a second leg sideways to down after a pullback.
- The next targets for the bears are the 20-month exponential average and the breakout point in October 2021.
- The prominent tails below the bear bars indicate that the bears are not yet as strong as they would like to be.
- The bulls want a reversal higher from a wedge bull flag (June 22, July 14 and Sept 26).
- They see the current move simply as a deep pullback following the buy climax and want at least a retest of the June high.
- While October might trade slightly lower, the bulls want October to close with a bull body.
- However, the problem with the bull’s case is that the move down is in a tight bear channel.
- The bulls will need a strong bull reversal bar or at least a micro double bottom before traders will be willing to buy aggressively.
- Since September was a bear bar closing near the lower half of the range, it is a weak buy signal bar for October. It is a good sell signal bar for October.
- For now, odds slightly favor sideways to down.
- Traders will be monitoring if the bears get another consecutive bear bar, or if Crude Oil trades lower, but reverses to close with a bull body.
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bull doji bar with tails above and below.
- This week traded below last week’s low but closed above it.
- The bears got a strong breakout below September 8 low last week following the double top bear flag (July 29 and Aug 30).
- However, they did not get follow-through selling this week.
- While the move down is 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 tight channel down increases the odds that the bears would likely get at least a small second leg sideways to down after a pullback.
- The bears want a continuation down to October 2021 high and the bull trend line.
- Bulls want a reversal from a wedge bull flag (June 22, July 14 and Sept 26) and a lower low major trend reversal bar.
- However, they have not been able to create sustained follow-through buying so far.
- The bulls will need to create consecutive bull bars closing near the high breaking far above the bear trend line and the 20-week exponential moving average to convince traders that the pullback may be over.
- Since this week was bull doji, it is a weak buy signal bar for next week.
- For now, we may start to see some sideways to up pullback beginning within a few weeks.
- The 20-week exponential moving average and bear trend line remains resistances above.
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