Market Overview: Crude Oil Futures
The market form a Crude Oil pullback on the weekly chart. The bears need to create follow-through selling next week to increase the odds of the bear leg beginning. The bulls see this week as a pullback and want at least a small second leg sideways to up to retest the recent leg extreme high (Jan 15).
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bear bar closing near its low with a small tail below.
- Last week, we said that the market remains in a large trading range. Traders would see if the bulls could continue to create follow-through buying or if the market would stall around the July high area, followed by a pullback in the weeks ahead.
- The market formed a pullback this week.
- The bulls got a breakout and measured move based on the height of the tight trading range which took them to the July high area.
- They see this week as a pullback and want at least a small second leg sideways to up to retest the recent leg extreme high (Jan 15).
- They hope to get a retest and a breakout above the July high.
- The bears want a reversal from a double top bear flag (Jul 5 and Jan 15).
- They hope that the July high will act as resistance.
- They see the recent move as a buy vacuum and a bull leg within a trading range.
- They want a retest of the middle of the trading range (around the 20-week EMA area).
- They need to create follow-through selling next week to increase the odds of the bear leg beginning.
- So far, the market remains in a large trading range.
- As strong as the recent move was, it could still only be a buy vacuum and a bull leg within a 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.
- For now, traders will see if the bears can create a strong follow-through bear bar.
- Or will the market form a retest of the January 15 high in the next 1-2 weeks (even if it forms a lower high or a one-or-two bar pullback) instead?
The Daily crude oil chart
- The market broke out below the ii (inside-inside) pattern on Tuesday with follow-through selling testing the 20-day EMA.
- Last week, we said that traders would see if the bulls could create more follow-through buying testing the April high area, or if the market would stall around the July or April highs, followed by a pullback to the 20-day EMA instead.
- The bulls got a strong breakout, and a measured move based on the height of the tight trading range testing the July high area.
- They hope to get a retest of the top of the trading range (Sep 2023).
- They see the current move as a pullback and want at least a small second leg sideways to up retesting the recent leg extreme high (Jan 15.
- They want the 20-day EMA to act as support.
- The bears want the market to reverse and retest the middle of the trading range from a double top bear flag (Jul 5 and Jan 15).
- They want the July high to act as resistance.
- They see the recent rally as a buy vacuum and a bull leg within a trading range.
- The move down (from Jan 15) is in the form of a 7-bar bear microchannel. That means persistent selling.
- The bears expect at least a small second leg sideways to down to retest the current leg extreme low (now Jan 24).
- If the market trades higher, they want a double top (Jan 15) and a lower high major trend reversal.
- So far, the pullback is in the form of a 7-bar bear microchannel which means persistent selling.
- Traders will see if the bulls can create a retest of the January 15 high, even if it forms a lower high.
- Or will the bears be able to create a second leg sideways to down, closing far below the 20-day EMA instead?
- For now, the recent rally while strong, may still only be a buy vacuum and a bull leg within a trading range.
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