Market Overview: Crude Oil Futures
The market formed a Crude Oil trend channel line overshoot, closing as a bear doji with a long tail below. The bulls hope to get a reversal from a higher low major trend reversal. The bears hope that the bear leg to retest the May low has begun.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bear doji closing around the middle of its range.
- Previously, we said that the odds slightly favor the market to trade at least a little lower.
- This week broke far below last week’s low but reversed to close with a long tail below. The bears are not as strong as they hoped to be.
- They got a larger second leg sideways to down and follow-through selling trading below the 20-week EMA.
- They hope that the strong move up (from Jun to Sept) was simply a buy vacuum and a bull leg within a larger trading range.
- They hope that the bear leg to retest the May low has begun.
- If the market trades higher, the bears want another leg down completing the wedge pattern with the first two legs being October 6 and November 16.
- Previously, the bulls had a tight bull channel from June to September.
- They see the current move as a two-legged pullback, forming a higher low major trend reversal.
- They want a reversal up from a trend channel line overshoot followed by a retest of the September high.
- Since this week’s candlestick is a bear doji closing around the middle of its range with a long tail below, it is not a strong sell signal bar.
- While the market can still trade sideways to down for a couple more weeks, a small pullback can begin within 1-3 weeks.
- However, if the bears continue to get a couple of strong consecutive bear bars, it will swing the odds in favor of retesting the trading range low.
The Daily crude oil chart
- Crude Oil formed a small pullback early in the week followed by a strong breakout on Thursday. Friday reversed a lot of Thursday’s move and was a big bull inside bar closing near its high.
- Previously, we said that while Crude Oil could still trade a little lower, odds slightly favor the market to still be in the sideways to up phase.
- The bear got 3 pushes down, forming a wedge pattern (Oct 6, Nov 8, and Nov 16).
- They want a retest of the May low, followed by a breakout below.
- If the market trades higher, they want the 20-day EMA or the bear trend line to act as resistance, followed by a retest of the current leg low (Nov 16).
- The bulls got a strong rally from June to September in the form of a tight bull channel which lasted a long time.
- They hope that the current move down is simply a deep pullback and has alleviated the prior overbought conditions.
- They want a reversal from a wedge bull flag (Oct 6, Nov 8, and Nov 16) and a trend channel line overshoot.
- They hope to get a retest of the September high.
- They will need to create consecutive bull bars closing near their highs, trading far above the 20-day EMA to increase the odds of higher prices.
- Since Friday was an inside bar, the market is in breakout mode.
- Because it is a bull inside bar closing near its high, odds slightly favor the first breakout to be above it. It is not a strong sell signal bar for Monday.
- The market may gap up on Monday. Small gaps usually close early.
- Traders will see if the bulls can create follow-through buying (preferably early next week). If they get that, it may be the beginning of a TBTL (Ten Bar, Two Legs) pullback.
- For now, while the selloff from September is quite strong, it has also lasted a long time and is slightly climactic.
- A minor pullback can begin at any moment.
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