Market Overview: Crude Oil Futures
The market formed a Crude oil large wedge bull flag within the trading range. Bulls need consecutive strong bull bars closing well above the 20-week EMA and the bear trend line to show they are gaining control. Bears need consecutive strong bear bars breaking below the October 20 low to increase the odds of another strong leg down.
Crude oil futures
The Weekly crude oil chart
- This week’s Crude Oil candlestick was a bear bar closing in its upper half with a long tail below.
- Last week, we said traders would watch whether bears could generate follow-through selling closing below the October 20 low, or whether the market would stall near the October 20 or November 25 lows and then retest the 20-week EMA and the bear trend line.
- The market traded below the October 20 low but reversed and closed back above it.
- Bulls view the December 16 selloff as a large wedge bull flag (Aug 13, Oct 20, and Dec 16) and as a bear leg within a broader trading range.
- They see the market forming a large higher low major trend reversal relative to the April 9 low.
- Bulls need consecutive strong bull bars closing well above the 20-week EMA and the bear trend line to show they are gaining control.
- Bears produced a third sideways-to-down leg this week (Dec 16).
- They want a retest near the trading range low (Apr 9).
- Bears need consecutive strong bear bars breaking below the October 20 low to increase the odds of another strong leg down.
- If the market trades higher, bears want the 20-week EMA and the bear trend line to act as resistance.
- Crude Oil remains in a large trading range.
- Until there is a clear breakout with sustained follow-through, traders will likely continue to Buy Low, Sell High (BLSH) — buying near the lower third and selling near the upper third of the range.
- Buyers may appear around the lower third of the trading range.
- Traders will watch whether bears can create follow-through selling below the October 20 low, or whether the market instead stalls near the October 20 low and then retests the 20-week EMA and the bear trend line in the weeks ahead.
- Poor follow-through and frequent reversals remain hallmarks of a trading range environment.
The Daily crude oil chart
- The market traded lower early in the week, followed by a sideways-to-up pullback from midweek onward.
- Last week, we said traders would watch whether bears could generate follow-through selling below the November 25 and October 20 lows, or whether the market would stall around those levels instead.
- The market traded below the October 20 low, but follow-through selling was limited.
- Bulls see the current price action forming a large wedge bull flag (Aug 13, Oct 20, and Dec 16) and a large higher low major trend reversal.
- They want the October 20 low, or the lower third of the large trading range, to act as support.
- Bulls need consecutive strong bull bars trading well above the 20-day EMA and the bear trend line to show they are regaining control.
- Bears produced a large third sideways-to-down leg this week (Dec 16).
- They want a strong leg down to test near the trading range low (Apr 9).
- If the market trades higher, bears want the 20-day EMA and the bear trend line to act as resistance.
- Bears need consecutive strong bear bars breaking well below the October 20 low to increase the odds of another strong leg down.
- The market remains in a large trading range.
- Until there is a clear breakout with sustained follow-through, traders will continue to Buy Low, Sell High (BLSH) — buying near the lower third and selling near the upper third of the range.
- Buyers may appear near the lower third of the trading range.
- For now, traders will watch whether bears can generate decisive follow-through selling below the October 20 low, or whether the market stalls near the October 20 low and then reverses back above the 20-day EMA instead.
- Poor follow-through and frequent reversals continue to define a trading range environment.
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