Market Overview: Crude Oil Futures
The Crude oil futures formed a 7-week tight trading range. The bulls did not get sustained follow-through buying this week and the weekly candlestick reversed into a bear bar. The bears will need to create follow-through selling next week to increase the odds of retesting the May 4 low.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bear bar with prominent tails above and below.
- Last week, we said that the odds slightly favor the Crude Oil to trade at least a little higher. Poor follow-through and reversals are common within a trading range.
- This week traded higher but reversed to close as a bear bar.
- The lack of sustained follow-through buying indicates that the bulls are not yet strong.
- The bulls want a reversal from a higher low major trend reversal (June 12) and a micro wedge (May 31, Jun 12, and June 23).
- They want a retest of the 20-week exponential moving average, the bear trend line, and the April high.
- The bulls will need to create consecutive bull bars closing near their highs to increase the odds of higher prices.
- The bears want a retest of the May 4 low followed by a breakout below.
- They will need to create follow-through selling next week to increase the odds of a retest and a breakout attempt below.
- The market is in a 31-week trading range. The last 7 weeks formed a tight trading range.
- Poor follow-through and reversals are common within a trading range.
- Traders will BLSH (Buy Low, Sell High) in trading ranges until there is a strong breakout from either direction with follow-through buying/selling.
- If the bears continue to fail to create sustained follow-through selling, the odds will swing in favor of the bull leg to begin within a few weeks.
The Daily crude oil chart
- Crude oil traded higher earlier in the week, closing above the 20-day exponential moving average (20-EMA). Thursday reversed back below the 20-EMA followed by weak follow-through selling on Friday.
- Last week, we said that if the bears fail to create sustained follow-through selling breaking far below the trading range low within the next few weeks, the odds of the bull leg beginning will increase.
- This week attempted to retest the trading range low (May 4) but fell short again.
- The bulls want a reversal up from around the bottom of the 31-week trading range; from a wedge bull flag (May 31, Jun 12, and June 23) and a higher low major trend reversal.
- They want a strong reversal breaking far above the 7-week tight trading range and trading far above the 20-day exponential moving average.
- For that, they will need to create consecutive bull bars closing near their highs to increase the odds of the bull leg beginning.
- If the market trades lower, the bulls hope that the current tight trading range (the last 7 weeks) is the final flag of the move down and want a reversal up from around the trading range low.
- The bears got a three-legged move down (May 31, Jun 12, and Jun 23) but fell short of the trading range low.
- They another leg down testing the trading range low (May 4).
- While Friday traded lower, it had a long tail below and closed in the upper half of the day’s range. It was not strong follow-through selling.
- Crude Oil has been trading within a tight trading range in the last 7 weeks, forming an expanding triangle.
- Poor follow-through and reversals are common in trading ranges.
- Crude Oil is also in a larger 31-week trading range. Most breakouts from trading ranges fail.
- Traders will BLSH (Buy Low, Sell High) in trading ranges until there is a strong breakout from either direction with follow-through buying/selling.
- If the bears fail to create sustained follow-through selling breaking far below the trading range low within the next few weeks, the odds of the bull leg beginning will increase.
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