Market Overview: Crude Oil Futures
The market formed a Crude Oil large second leg sideways to down on the weekly chart. The bears must continue to create follow-through selling to increase the odds of breaking below the November 18 low. The bulls hope the lower third of the trading range will be an area of support.
Crude oil futures
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 a long tail below.
- Last week, we said that traders would see if the bears could continue to create follow-through selling trading below the 20-week EMA, or if the market would reverse back above the 20-week EMA and trade higher within the next few weeks instead.
- The bears want another strong leg down to test the November 18 low area from a wedge bear flag (Feb 3, Feb 11, and Feb 20). They got what they wanted.
- The move down is in a weaker bear channel (many overlapping ranges, doji bars and prominent tails below candlesticks).
- The bears must continue to create follow-through selling to increase the odds of breaking below the November 18 low.
- If the market trades higher, they want the 20-week EMA or the bear trend line to act as resistance.
- The bulls see the current move as a large two-legged bear leg.
- They hope the lower third of the trading range will be an area of support.
- They need to create strong bull bars closing near their highs and trading back above the 20-week EMA to show that they are back in control.
- The market is currently trading slightly below the middle of the large trading range.
- The market could still be in the sideways to down leg phase.
- Traders will see if the bears can continue to create follow-through selling testing the November 18 low area.
- Or will the market start to stall around the current levels and reverse back to the middle of the trading range instead (around the 20-week EMA)?
- 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.
- Poor follow-through and frequent reversals are hallmarks of a trading range price action.
The Daily crude oil chart
- The market traded lower in the first half of the week. Crude Oil formed a pullback on Friday but the candlestick was a bull bar with a long tail above.
- Previously, we said traders would see if the bears could create a breakout below the February 18 low with sustained follow-through selling which will increase the odds of another strong leg towards the November low area.
- The bears got a larger second leg sideways to down (with the first leg being the Jan 15 high to the Jan 27 low).
- They hope to get a retest of the November low and the trading range low area.
- If the market trades higher, they want the 20-day EMA or the bear trend line to act as resistance.
- They want at least a small sideways to down leg to retest the current leg extreme low (now Mar 5).
- The bulls see the current move as a large two-legged bear leg within the trading range.
- They want a reversal from a wedge pattern (Jan 27, Feb 18, and Mar 5).
- They hope that the November low area and the lower third of the trading range will be an area of support.
- They need to create consecutive bull bars closing near their highs breaking far above the 20-day EMA and the bear trend line to show they are back in control.
- So far, the market formed a large two-legged bear leg in the trading range.
- The move down has a lot of pullbacks and overlapping ranges which is a weaker bear channel.
- For now, traders will see if the bears can continue to create follow-through selling trading below the November 18 low area.
- Or will the market start to stall around the current levels followed by a pullback to the 20-day EMA instead?
- The bear leg within the trading range is currently underway. The market could still trade slightly lower.
- The market remains in a large trading range. Traders will BLSH (Buy Low, Sell High) within the trading range.
- That means buying in the lower third and selling in the upper third of the trading range.
Market analysis reports archive
You can access all weekend reports on the Market Analysis page.
