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Crude Oil Bear Flag

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Market Overview: Crude Oil Futures

The market is forming a Crude Oil bear flag on the weekly chart. The bears must create strong bear bars trading below the 20-week EMA to increase the odds of the bear leg testing the trading range low. The bulls want the 20-week EMA to act as support, followed by a retest of the June 23 high, even if it only forms a lower high.

Crude oil futures

The Weekly crude oil chart

Crude Oil Weekly - Bear Flag, Bears Need Strong FT Selling, Crude Oil Bear Flag
  • This week’s candlestick on the weekly Crude Oil chart was a bear bar closing around the middle of its range with a long tail below.
  • Last week, we said traders would see if the bulls could create more follow-through buying to retest near the June 23 high, or if the market would trade slightly higher but stall and retest the 20-week EMA in the weeks ahead instead.
  • The market traded higher early in the week, but had limited follow-through buying, followed by a retest of the 20-week EMA on Wednesday. The market was mostly sideways and overlapping last week’s range.
  • Previously, the bulls got a bull leg and a buy vacuum to retest the top of the trading range.
  • The market then formed a deep pullback to the middle of the trading range.
  • They want the 20-week EMA to act as support, followed by a retest of the June 23 high, even if it only forms a lower high. So far, the market is holding above the 20-week EMA.
  • The bulls must create strong bull bars to increase the odds of retesting the June 23 high.
  • The bears see the rally (Jun 23) as a bull leg and a buy vacuum within the trading range.
  • They want the bear leg to retest the bottom of the trading range (Apr 9).
  • They see the last three weeks forming a wedge bear flag (Jul 2, Jul 8, and Jul 14) and want another strong leg down from a lower high.
  • They must create strong bear bars trading below the 20-week EMA to increase the odds of the bear leg testing the trading range low.
  • The market remains in a large trading range.
  • Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction of the trading range with sustained follow-through buying/selling.
  • That means selling in the upper third and buying in the lower third of the trading range.
  • The market is currently trading around the middle of the trading range, which is a magnet and an area of balance.
  • For now, traders will see if the bulls can create more follow-through buying to retest near the June 23 high.
  • Or will the bears be able to create bear bars trading below the 20-week EMA in the weeks ahead instead?
  • Poor follow-through and frequent reversals are hallmarks of trading ranges.

The Daily crude oil chart

Crude Oil Daily - Wedge Bear Flag, Bears Need FT Selling
  • The market traded higher on Monday but reversed into a bear reversal bar. The market traded below the 20-day EMA on Wednesday, but the follow-through selling was limited. Friday traded higher but reversed into a bear doji closing near its low.
  • Last week, we said traders would see if the bulls could create more follow-through buying, or if the move would be sideways with overlapping ranges instead.
  • So far, the pullback is mostly sideways around the 20-day EMA.
  • Previously, the bulls got a bull leg and a buy vacuum testing the top of the trading range.
  • They see the big spike down as a deep pullback testing the middle of the trading range and the 20-day EMA.
  • They want the 20-day EMA to act as support, forming a higher low.
  • They want a retest of the recent high (Jun 23), even if it only forms a lower high.
  • They need to create strong consecutive bull bars to show they are back in control.
  • The bears view the move up (Jun 23) as a buy vacuum and bull leg within the trading range.
  • They got a retest of the middle of the trading range, but the follow-through selling has been limited.
  • They see the last three weeks forming a wedge bear flag (Jul 2, Jul 8, and Jul 14) and Friday’s candlestick (Jul 18) forming a lower high.
  • They must create strong bear bars trading below the 20-day EMA to increase the odds of the 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 buying in the lower third and selling in the upper third of the trading range.
  • The market is currently trading around the middle of the trading range, which is a magnet and an area of balance.
  • For now, traders will see if the bulls can create more follow-through buying. If they can, that would increase the odds of a retest near the June 23 high.
  • Or will the move continue to be sideways with overlapping ranges instead? If this is the case, that would increase the odds of at least a small sideways to down leg to retest the June 24 low.
  • Poor follow-through and frequent reversals are hallmarks of trading ranges.

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