Market Overview: Crude Oil Futures
There was no follow-through selling on Crude Oil monthly chart. The bears see May as a pullback and hope to get another leg down. The bulls need to create a follow-through bull bar in June to increase the odds of the bull leg beginning.
Crude oil futures
The Monthly crude oil chart
- The May monthly Crude Oil candlestick was an inside bull bar closing above the middle of its range with prominent tails above and below.
- Last month, we said traders would see if the bears could create a follow-through bear bar, or if the market would stall and trade higher instead.
- The bears were not able to create a follow-through bear bar.
- Previously, the bears got a strong bear leg to retest the bottom of the trading range.
- They want a breakout below the trading range followed by a measured move based on the height of the trading range.
- They see May as a pullback and hope to get another leg down.
- They need to create a strong breakout below the December and May lows with follow-through selling to increase the odds of a successful breakout.
- The bulls see the recent move down (Apr 9) as a bear leg and a sell vacuum testing the trading range low.
- They hope the trading range low area will act as support.
- If the market trades lower, they want a failed breakout below the December low.
- They want the market to retest the middle of the trading range (around the 20-month EMA).
- They need to create a follow-through bull bar in June to increase the odds of the bull leg beginning.
- As strong as the recent selloff was (Apr 9), it could still be a sell vacuum and a bear leg within the trading range.
- Until a breakout with strong follow-through selling, the market remains in a trading range.
- Markets have inertia and tend to continue what they have been doing.
- Traders will BLSH (Buy Low, Sell High) in a trading range until a breakout with sustained follow-through buying/selling.
- That means buying in the lower third or selling in the upper third of the trading range.
- For now, traders will see if the bulls can create a follow-through bull bar in June.
- Or will the bears get a retest of the April 9 low instead?
- The market is currently trading around the lower third of the trading range which can be the buy zone of trading range traders.
- Poor follow-through and frequent reversals are hallmarks of trading ranges.
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bear bar closing in its lower half with prominent tails above and below.
- Last week, we said traders would see if the bears could create a follow-through bar, or if the market would continue to trade sideways followed by a retest above the April 23 high instead.
- While the market formed a bear bar this week, it mostly overlapped with the prior 2 weeks’ range.
- The bulls saw the prior selloff as a sell vacuum and a bear leg within the trading range.
- They want a reversal from a wedge pattern (Mar 5, Apr 9, and Mar 5) and a higher low major trend reversal (May 5).
- They hope to get a retest of the middle of the trading range (around the $67 area).
- They see the last 2-3 weeks simply as a pullback and want a second leg sideways to up.
- If the market trades lower, they want it to form a higher low.
- They want the lower third of the trading range to act as support.
- They need to create strong bull bars trading above the April 23 high to increase the odds of the bull leg beginning.
- The bears got a 3-legged bear leg (Mar 5, Apr 9, and Mar 5) testing the bottom of the trading range.
- They see the current move as a pullback and want a reversal from a double top bear flag (Apr 23 and May 21).
- They want the April 23 high or the 20-week EMA to act as resistance. So far, this is the case.
- They need to create a strong follow-through selling to increase the odds of a reversal from a double top bear flag.
- While the prior selloff was strong (Apr 9, May 5), it could still be a sell vacuum and a bear leg testing the bottom of the trading range.
- 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.
- For now, traders will see if the bears can create a follow-through bar.
- If the market continues to stall below the April 23 high, we will likely see more selling pressure return within the next few weeks.
- Or will the market continue to trade sideways (disappointing for the bears) instead? If so, the odds of a retest above the April 23 high will increase.
- Poor follow-through and frequent reversals are hallmarks of trading ranges.
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