Market Overview: Crude Oil Futures
The weekly chart formed a Crude Oil ioi pattern (inside-outside-inside), a breakout mode pattern. The bears want a breakout from the ioi pattern and a wedge bear flag with a strong close below the 20-week EMA. If the market trades lower, the bulls want a reversal from a higher low major trend reversal.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was an inside bear bar closing near its low.
- Last week, we said that odds slightly favor the market to still be in the sideways to up pullback phase. Poor follow-through and reversals are the hallmarks of a tight trading range.
- This week formed an ioi (inside-outside-inside) breakout pattern.
- The bears see the recent sideways to up pullback as forming a wedge bear flag (Dec 26, Jan 29, Mar 1).
- They want another leg down to retest the prior leg low (Dec 13).
- They will need to create a breakout below the ioi (inside-outside-inside) pattern by creating a follow-through bear bar, preferably closing below the 20-week EMA.
- The bulls see the selloff to the December 13 low simply as a bear leg within a trading range.
- They got a reversal from a higher low major trend reversal (Dec 13), a wedge bull flag (Oct 6, Nov 16, and Dec 13) and a small double bottom bull flag (Jan 13 and Feb 5).
- They will need to create sustained follow-through buying above the 20-day EMA and the January high to increase the odds of the bull leg beginning.
- If the market trades lower, they want a reversal from a higher low major trend reversal.
- While the market has traded above the 20-week EMA, the move has a lot of overlapping candlestick. The bulls are not as strong as they hoped to be.
- If the market trades lower, they want a reversal from a higher low major trend reversal.
- Since this week’s candlestick is a bear bar closing near its low, it is a sell signal bar for next week.
- Odds slightly favor a breakout below the ioi (inside-outside-inside) first. The first breakout can fail 50% of the time.
- Traders will see if the bears can create a follow-through bear bar. If they do, especially if it is strong and closes far below the 20-week EMA, it could signal the end of the sideways to up pullback phase.
- Crude Oil is currently in an 83-week trading range. Traders will BLSH (Buy Low, Sell High) until there is a breakout with sustained follow-through buying/selling from either direction.
- Poor follow-through and reversals are the hallmarks of a tight trading range.
The Daily crude oil chart
- Crude Oil traded sideways to down for the week, stalling around the January high area. Friday closed as an outside bear bar.
- Previously, we said that odds slightly favor the 13-weeks sideways to up pullback to be minor and favor at least a small leg retesting the December low after the pullback.
- The bulls see the move down to December 13 simply as a bear leg within a trading range.
- They got a reversal from a wedge pattern (Oct 6, Nov 16, and Dec 13) and a double bottom bull flag (Dec 13 and Feb 5).
- They hope to get a breakout above the January high followed by the beginning of the bull leg to retest the September high.
- So far, the market continues to stall around the January high area with no strong breakout yet.
- The bulls will need to create consecutive bull bars closing near their highs, trading far above the January high to increase the odds of the bull leg beginning.
- If the market trades lower, they want a reversal from a higher low major trend reversal.
- The bear sees the current pullback as forming a wedge bear flag (Dec 26, Jan 29, and Mar 1).
- They want the market to stall around the January high area or slightly above it. So far this is the case.
- They want a retest of the December low after the current pullback.
- For now, the minor pullback (sideways to up) phase can end if the bears can create sustained follow-through selling next week, closing below the 20-day EMA.
- Odds slightly favor the 13-week sideways-to-up pullback to be minor and favor at least a small leg retesting the December low after the pullback. This remains true.
- Crude Oil remains in an 83-week trading range. Traders will BLSH (Buy Low, Sell High) in trading ranges until there is a breakout with sustained follow-through buying/selling.
- Poor follow-through and reversals are the hallmarks of a trading range.
- Traders will see if the bulls can get a breakout above the January high or will the retest of the December low begin soon.
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