Crude Oil Weak Close above 20-Week EMA

Market Overview: Crude Oil Futures

The weekly candlestick was a Crude oil weak close above the 20-week EMA (exponential moving average) and the bear trend line. The bulls need to create follow-through buying next week to increase the odds of reaching the April high. The bears want a reversal down from a double top bear flag with June 5 high and from a lower high. 

Crude oil futures

The Weekly crude oil chart

• This week’s candlestick on the weekly Crude Oil chart was a bull bar with a long tail above.
• Last week, we said if the bears continue to fail to create sustained follow-through selling, the odds will swing in favor of the bull leg beginning. 
• The bulls want a reversal from a higher low major trend reversal (June 12) and a micro wedge (May 31, Jun 12, and June 28).
• They got a bull bar closing above the 20-week exponential moving average and the bear trend line.
• They will need to continue creating follow-through buying trading far above the 20-week exponential moving average and the bear trend line to increase the odds of higher prices.
• The long tail above this week’s candlestick indicates that the bulls are not yet strong.
• The next target for the bulls is the April high. 
• The bears want a retest of the May 4 low followed by a breakout below.
• However, they have not yet been able to create sustained follow-through selling from the 10-week tight trading range.
• The bears hope that this week was simply a lower high pullback. They want a reversal down from a double top bear flag (Jun 5 and Jul 13) around the 20-week exponential moving average and bear trend line area.
• They will need to create strong consecutive bear bars to increase the odds of a retest of the May low.
• The market is in a 34-week trading range. The last 10 weeks formed a tight 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.
• For now, traders will see if the bulls can create a follow-through bull bar following this week’s close above the 20-week exponential moving average and bear trend line area.
• Or will next week close as a bear bar below the 20-week exponential moving average thereby increasing the odds of a retest of the May low?

The Daily crude oil chart

• Crude oil traded higher for the week followed by a pullback on Friday.
• Last week, we said the odds of the bull leg may have already begun and traders will see if the bulls can continue to create follow-through buying or will the market trade slightly higher but stall around the 9-week trading range high area.
• This week broke above the 9-week tight trading range with follow-through buying.
• The bulls want a reversal up from a wedge bull flag (May 31, Jun 12, and June 28) and a higher low major trend reversal.
• They want a strong breakout above the 10-week tight trading range and a retest of the April high.
• The move up is in a tight bull channel. That means persistent buying.
• Odds slightly favor at least a small second leg sideways to up after a brief pullback.
• The bears hope that the tight channel up is simply a buy vacuum within the smaller 10-week trading range.
• They want the market to reverse lower from the expanding triangle and retest the May low.
• Crude Oil has been trading within a 34-week trading range. Poor follow-through and reversals are common in trading ranges. 
• Traders will BLSH (Buy Low, Sell High) in trading ranges until there is a strong breakout from either direction with follow-through buying/selling.
• The market is currently trading around the middle of the 34-week trading range. It could be an area of balance between the bulls and bears.
• For now, traders will see if the bulls can continue to create follow-through buying or will the market stall and trade back into the 10-week trading range.

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