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Weekly Crude Oil Wedge Bear Flag

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Market Overview: Crude Oil Futures

The market formed a weekly Crude Oil wedge bear flag (Oct 24, Nov 7, and Nov 22). The bears must create sustained follow-through selling to increase the odds of a breakout below the triangle. The bulls see the current move as a three-legged pullback – a wedge bull flag (Oct 29, Nov 18, and Dec 6) and want a reversal to retest the top of the triangle.

Crude oil futures

The Weekly crude oil chart

Crude Oil Weekly - TTR, Wedge Bear Flag, Bears Need FT, Weekly Crude Oil Wedge Bear Flag
  • This week’s candlestick on the weekly Crude Oil chart was a bear bar closing near its low with a long tail above.
  • Last week, we said the market is in a tight trading range. Traders would see if the bears could create a strong entry bar or if the market would trade slightly lower but stall and reverse higher.
  • This week was a bear entry bar even though the candlestick had a lot of overlapping range with the prior 7 candlesticks.
  • The bears got a follow-through bear bar. They want a retest of the October/September lows and the bottom of the triangle from a wedge bear flag (Oct 24, Nov 7, and Nov 22).
  • They want the bear trend line or the 20-week EMA to act as resistance. So far this is the case.
  • They must create sustained follow-through selling to increase the odds of a breakout below the triangle.
  • The bulls see the current move as a three-legged pullback – a wedge bull flag (Oct 29, Nov 18, and Dec 6) and want a reversal to retest the top of the triangle.
  • The problem with the bull’s case is that they have not yet been able to create sustained follow-through buying above the 20-week EMA in the last 7 weeks.
  • If the market trades lower, they want the October/September lows or the bottom of the triangle to act as support.
  • Since this week’s candlestick is a bear bar closing near its low, it is a sell signal bar for next week.
  • Because of the repeated failure to break above the 20-week EMA, we may start to see more selling pressure appear.
  • The market may trade at least a little lower.
  • For now, traders will see if the bears can create a breakout below the wedge bear flag (Oct 24, Nov 7, and Nov 22) and test the October/September lows and the bottom of the triangle.
  • Or will the market continue to trade within the 7-week tight trading range?
  • The market has been trading sideways with overlapping candlesticks, poor follow-through and frequent reversals which means the market is in a tight trading range.
  • The middle of the trading range is an area of balance and a magnet.
  • The lower third of the large trading range can be the buy zone of trading range traders.
  • The market is in a large trading range (Trading range high: September 29, Trading range low: May 4).
  • Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction with sustained follow-through buying/selling.

The Daily crude oil chart

Crude Oil Daily - Low 4 Sell Setup, Bears Need Follow-through
  • The market traded higher earlier in the week. Wednesday traded higher but reversed into a bear bar closing below the 20-day EMA with follow-through selling on Thursday and Friday.
  • Previously, we said that the market is in a tight trading range. Traders would see if the bulls could create follow-through buying breaking far above the November 7 high or if the market would stall around the current levels followed by another leg down to retest the October or September lows instead.
  • So far, the bulls have not yet been able to create follow-through buying breaking far above the 20-day EMA and the market is making lower highs.
  • The bulls see the recent move as a three-legged pullback, a wedge bull flag (Oct 19, Nov 18, and Dec 6).
  • They want a reversal from a wedge bull flag and a higher low major trend reversal to retest the top of the triangle and the October 8 high.
  • The bulls must create consecutive bull bars closing near their highs, trading far above the 20-day EMA and the bear trend line to increase the odds of a retest of the October 8 high.
  • The bears want a retest of the October and September lows. They want a breakout below the bottom of the triangle.
  • They want a breakout from the wedge bear flag (Nov 7, Nov 22, and Dec 4) or the large Low 4 pattern.
  • They must create follow-through selling to increase the odds of breaking below the triangle pattern.
  • So far, the candlesticks in the last 7 weeks have a lot of overlapping ranges which indicates tight trading range price action.
  • Poor follow-through and reversals are hallmarks of a trading range.
  • Because of the repeated failure to create sustained buying above the 20-day EMA, we may see more selling pressure appear.
  • The market may trade at least a little lower.
  • Traders will see if the bears can create follow-through selling breaking below the Low 4 pattern.
  • Or will the market continue to chop sideways within the tight trading range instead?
  • The lower third of the large trading range can be the buy zone of trading range traders.
  • The middle of the trading range is an area of balance and a magnet.
  • Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction with sustained follow-through buying/selling.

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