Market Overview: Crude Oil Futures
The Crude Oil bulls need strong follow-through buying to increase the odds of the bull leg starting. The bears see the current move as a pullback. They want the market to form a lower high or a double top bear flag with the April 2 high.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bull doji closing in its upper half with a long tail below.
- Last week, we said the market could still trade slightly lower. Traders would see if the bears could create a follow-through bear bar breaking below the September or December low area, or if the market would stall around the current levels and form a small pullback in the weeks ahead instead.
- The bears got a large 2-legged bear leg testing the bottom of the trading range (May 4, 2023).
- They want a strong breakout below the September or December lows followed by a measured move based on the height of the trading range.
- While the market broke below the September and December lows this week, it lacked sustained follow-through selling.
- The bears see the current move as a pullback.
- They want the market to form a lower high or a double top bear flag with the April 2 high.
- They want the 20-week EMA or the bear trend line to act as resistance.
- They hope to get a retest of the April 9 low after the pullback.
- The bulls see the current move as a large 2-legged sell vacuum and a bear leg within the trading range.
- They see the selloff as climactic. They want the bull leg to begin.
- They hope to get at least a small sideways to up pullback lasting a few weeks.
- They hope that the bottom of the trading range will act as support followed by a retest of the middle of the trading range (around the 20-week EMA).
- Since this week’s candlestick is a bull doji closing in its upper half, it can be a buy signal bar for next week.
- The bulls need to create a strong bull entry bar to increase the odds of testing the middle of the trading range.
- While the recent move down was strong, it was also slightly climactic.
- Crude oil is currently trading around the lower third of the trading range which is the buy zone of trading range traders.
- 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.
- For now, the market could trade slightly higher.
- Traders will see if the bulls can create a strong entry bar. That would increase the odds of a retest near the 20-week EMA.
- Or will the market stall and close with a long tail or a bear body instead?
The Daily crude oil chart
- The market broke below the December low on Wednesday but reversed into an outside bull bar. Crude oil then traded sideways for the rest of the week.
- Previously, we said the market remains in a large trading range. Traders will BLSH (Buy Low, Sell High) within the trading range, which means buying in the lower third and selling in the upper third of the trading range.
- The bears got a large 2-legged bear leg and a sell vacuum within the trading range.
- While the move down in the last 2 weeks was strong, it was also slightly climactic.
- They want any pullback to be weak and sideways (overlapping candlesticks, doji(s), bear bars, and long tails above candlesticks).
- They want the 20-day EMA or the bear trend line to act as resistance.
- If the market trades higher they want it to form a double top bear flag with the April 2 high.
- They hope to get at least a small sideways to down leg to retest the recent leg extreme low (Apr 9) after the pullback, even if it only forms a higher low.
- The bulls see the move to the April 9 low as a large 2-legged bear leg and a sell vacuum within the trading range.
- They want a reversal from a climactic selloff and the bull leg to begin.
- At the least, they want a TBTL (Ten Bars, Two Legs) pullback lasting a couple of weeks.
- They need to create strong consecutive bull bars closing near their highs trading far above the 20-day EMA to show they are back in control.
- So far, the market tested near the trading range low but lacked sustained follow-through selling.
- While the selloff was strong, it could still be a sell vacuum and a bear leg within the trading range.
- For now, the market could still be in the sideways to up pullback phase.
- Traders will see if the bulls can create sustained follow-through buying trading far above the 20-day EMA.
- Or will the pullback lack sustained follow-through buying instead?
- 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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