Market Overview: Crude Oil Futures
The market formed a weekly Crude Oil buy vacuum test of the trading range high. The bulls hope to get a breakout above the top of the trading range. The bears want the upper third of the trading range to act as resistance. The market remains volatile due to the renewed conflict in the Middle East and how it is being handled.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a big bull bar closing in its upper half with a long tail above.
- Last week, we said the market could still trade slightly higher. Traders would see if the bulls could create a strong follow-through bar above the 20-week EMA or if the market would trade slightly higher but close with a long tail or a bear body and below the 20-week EMA instead.
- The market traded higher for most of the week followed by a big spike up on Friday following the breakout of conflict in the Middle East.
- The bulls saw the prior selloff as a sell vacuum and a bear leg within the trading range.
- They got a reversal from a wedge pattern (Mar 5, Apr 9, and Mar 5) and a higher low major trend reversal (May 5) to test the top of the trading range.
- They hope to get a breakout above the top of the trading range.
- If the market forms a pullback, they want a retest of the June 13 high, even if it only forms a lower high.
- The bears see the current move as a bull leg and a buy vacuum within the trading range.
- They want the upper third of the trading range to act as resistance.
- They must create strong bear bars to show they are back in control.
- 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.
- As strong as the current move is, it could still be a buy vacuum and a bull leg within the trading range.
- The middle of the trading range can be a magnet (around the $67 area).
- The market is currently trading around the upper third of the trading range which could be the sell zone of trading range traders.
- The market remains volatile due to the renewed conflict in the Middle East and how it is being handled.
- Poor follow-through and frequent reversals are hallmarks of trading ranges.
The Daily crude oil chart
- The market traded higher to test the middle of the trading range by midweek. Friday spiked up to test the top of the trading range following the renewed conflict in the Middle East.
- Last week, we said the market could still trade slightly higher. Traders would see if the bulls could create strong follow-through buying above the April 23 high and if yes, the odds of retesting the $67-70 area will increase.
- The bulls got a reversal from a wedge pattern (Mar 5, Apr 9, and May 5), a higher low major trend reversal (May 5) and a wedge bull flag (May 15, May 23 and May 30).
- They want a breakout above the top of the trading range.
- They want at least a small sideways to up to retest the June 13 high, even if it only forms a lower high.
- The bears see the current move as a buy vacuum and bull leg within the trading range.
- They want the upper third of the trading range to act as resistance.
- They must create strong bear bars to show they are back in control.
- For now, the market remains in a large trading range.
- The middle of the trading range can be a magnet (around $67).
- The market is trading around the upper third of the trading range which can be the sell zone of trading range traders.
- The renewed conflict in the Middle East will keep prices volatile depending on how the issue is being handled.
- Poor follow-through and frequent reversals are hallmarks of trading ranges.
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