Market Overview: Crude Oil Futures
Crude oil reversed to the middle of trading range this week. The bears want a reversal from a large wedge bear flag (Jul 30, Sep 26, and Oct 24). The bulls need to create strong consecutive bull bars trading far above the 20-week EMA and the bear trendline to increase the odds of testing the trading range high.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the Crude Oil weekly chart was an outside bull bar, closing in its upper half with a small tail on top.
- Last week, we said traders would watch whether the bears could create sustained follow-through selling in the weeks ahead, or if the market would find buyers near the lower third of the trading range instead.
- This week, the market traded slightly lower but found buyers in the lower third of the range, leading to a reversal back toward the middle of the trading range.
- The bulls view the recent selloff as a large two-legged bear leg (first leg: Jun 23–Aug 13).
- They want the lower third of the large trading range to act as support, which has been the case so far.
- They need to create strong consecutive bull bars trading far above the 20-week EMA and the bear trendline to increase the odds of testing the trading range high.
- Recently, the bears created another leg down from a large double top bear flag (Jul 30 and Sep 26), though the selloff fell short of the measured move target (based on the height of the prior trading range).
- They see the current move as a pullback and want the 20-week EMA and bear trendline to act as resistance.
- They want a reversal from a large wedge bear flag (Jul 30, Sep 26, and Oct 24).
- They hope to get at least a small sideways-to-down leg to retest the October 20 low, even if it only forms a higher low.
- If the market trades higher, they want the September 26 high to serve as resistance.
- Crude Oil remains in a large trading range.
- Traders may continue to BLSH (Buy Low, Sell High) within the range — buying in the lower third and selling in the upper third — until there is a decisive breakout with sustained follow-through in either direction.
- Currently, the market is trading around the middle of the range, an area of balance and a magnet.
- Traders will monitor whether the bulls can create more follow-through buying above the 20-week EMA and the bear trend line.
- Or if the market will stall around the 20-day EMA and form a small retest of the October 20 low instead?
The Daily crude oil chart
- The market traded slightly lower on Monday, but there was no follow-through selling. It then traded higher on Wednesday, followed by a strong gap up on Thursday. Friday traded slightly higher but reversed to close as a bear doji with a long tail on top.
- Last week, we said traders would see if the bears could create sustained follow-through selling to reach the measured move target around $55, or if the market would find buyers around the lower third of the trading range instead.
- The market found buyers in the lower third of the range and reversed sharply back to the middle of the trading range.
- The bulls see the recent selloff (Oct 20) as the third leg down, forming a large wedge pattern.
- They want the lower third of the large trading range to continue acting as support, which so far has been the case.
- They created a reversal from both a large wedge bull flag (Jun 24, Aug 13, and Oct 20) and a smaller wedge bull flag (Oct 2, Oct 10, and Oct 20).
- The bulls now want a strong bull leg to retest the top of the trading range.
- They need to create strong consecutive bull bars trading above the 20-day EMA and the bear trendline to show they are regaining control.
- If there is a pullback, they want it to form a higher low (relative to Oct 20), followed by a second leg sideways to up.
- The bears got another leg down from a large double top bear flag (Jul 30 and Sep 26).
- The market came close to the measured move target (around $55) but fell short.
- They see the current move up as a pullback and want a reversal from a large wedge bear flag (Jul 30, Sep 26, and Oct 24).
- They want a retest of the recent low (Oct 20), even if it only forms a higher low.
- They want the bear trendline to act as resistance and for the market to reverse below the 20-day EMA.
- If the market trades higher, they want the September 26 high to act as resistance.
- The market remains in a large trading range.
- Traders will continue to BLSH (Buy Low, Sell High) until there is a clear breakout in either direction, with sustained follow-through buying or selling.
- That means buying in the lower third and selling in the upper third of the range.
- The market is currently trading around the middle of the large range — an area of balance and a magnet.
- For now, traders will see if the bulls can create sustained follow-through buying above the 20-day EMA and break above the bear trendline.
- Or will the market stall, followed by a sideways-to-down leg to retest the recent low (Oct 20) instead?
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