Market Overview: Crude Oil Futures
The market formed a weaker Crude Oil bear leg testing the November low area. The bears hope to get a retest of the November 18 low followed by a breakout to test the trading range low. The bulls hope the November low area or the lower third of the trading range will be an area of support.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was an inside doji bar closing in its upper half.
- Last week, we said that traders would see if the bears could continue to create follow-through selling testing the November 18 low area. Or if the market would stall around the current levels and reverse back to the middle of the trading range instead (around the 20-week EMA).
- So far, the market is stalling around the March 5 low area.
- The bears got another leg down to test the November 18 low area from a wedge bear flag (Feb 3, Feb 11, and Feb 20).
- The move down is in a weaker bear leg (many overlapping ranges, doji bars and prominent tails below candlesticks).
- They have a 6-bar bear microchannel which also means persistent selling. This increases the odds of sellers above the first minor pullback.
- The bears hope to get a retest of the November 18 low followed by a breakout to test the trading range low.
- If the market trades higher, they want the bear trend line or the 20-week EMA to act as resistance.
- The bulls see the current move as a large two-legged bear leg.
- They hope the November low area or the lower third of the trading range will be an area of support.
- They need to create strong bull bars closing near their highs and trading back above the 20-week EMA to show they are back in control.
- The market is trading slightly below the middle of the large trading range. The middle of the trading range is an area of balance and a magnet.
- The market could still be in the sideways to down leg.
- For now, traders will see if the bears can create follow-through selling testing the November 18 low area.
- Or will the market continue to stall around the current levels followed by a reversal to the middle of the trading range instead (around the 20-week EMA)?
- If the market forms a pullback (bounce) but is weak and lacks follow-through buying, the odds of a retest of the November 18 low and a breakout attempt will increase.
- If the bulls can create strong consecutive bull bars (bull spike) trading far above the 20-week EMA or the bear trend line, that would swing the odds in favor of the bull leg beginning.
- The market remains in a large trading range.
- Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction with sustained follow-through buying/selling.
- That means selling in the upper third and buying in the lower third of the trading range.
- Poor follow-through and frequent reversals are hallmarks of a trading range price action.
The Daily crude oil chart
- The market traded sideways for the week.
- Last week, we said traders would see if the bears could continue to create follow-through selling trading below the November 18 low, or if the market would start to stall around the current levels followed by a pullback to the 20-day EMA instead.
- So far, the market is stalling around the November low area.
- The bears got a larger second leg sideways to down (with the first leg being the Jan 15 high to the Jan 27 low).
- They hope to get a retest of the November low and the trading range low area.
- They see the current sideways trading forming a double top bear flag (Mar 7 and Mar 13).
- If the market trades higher, they want a lower high and the 20-day EMA or the bear trend line to act as resistance.
- They want at least a small sideways to down leg to retest the current leg extreme low (Mar 5) after any pullback.
- The bulls see the current move as a large two-legged bear leg within the trading range.
- They want a reversal from a wedge pattern (Jan 27, Feb 26, and Mar 5).
- They hope the November low area will be an area of support.
- They need to create consecutive bull bars closing near their highs breaking far above the 20-day EMA and the bear trend line to show they are back in control.
- So far, the market formed a large two-legged bear leg and a small trading range in the last 8 trading days.
- The move down has a lot of pullbacks and overlapping ranges which is a weaker bear leg.
- The move is in a tight bear channel which means persistent selling (and pullbacks higher lack follow-through buying).
- For now, traders will see if the bears can continue to create follow-through selling trading below the November 18 low area.
- Or will the market continue to stall around the current levels followed by a pullback above the 20-day EMA instead?
- The bear leg within the trading range is currently underway. The market could still be in the sideways to down leg.
- The market remains in a large trading range. Traders will BLSH (Buy Low, Sell High) within the trading range.
- That means buying in the lower third and selling in the upper third of the trading range.
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