Market Overview: Crude Oil Futures
The market formed a Crude oil wedge bull flag pullback. Bulls see the current move as a retest of the October low and want a reversal from a higher-low major trend reversal and a wedge bull flag (Oct 30, Nov 6, Nov 13). If the market trades higher, bears want the 20-week EMA or the October 24 high to act as resistance.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the Crude Oil weekly chart was a bull doji closing slightly above the middle of its range, with prominent tails.
- Last week, we said traders would watch whether bears could create a strong retest of the October low, or if the market would reverse to retest the 20-week EMA and the October 24 high instead.
- The market traded higher to test the 20-week EMA early in the week but reversed lower on Wednesday. There was no follow-through selling, and the market reversed off its low on Friday.
- Bulls see the recent selloff (Oct 20) as a large two-legged bear leg within the trading range (first leg: Jun 23–Aug 13).
- They see the current move as a retest of the October low and want a reversal from a higher-low major trend reversal and a wedge bull flag (Oct 30, Nov 6, Nov 13).
- They need strong consecutive bull bars closing far above the 20-week EMA and the bear trend line to increase the odds of testing the trading range high.
- Bears see the recent move (Oct 24) as a pullback and want the 20-week EMA and the bear trend line to act as resistance.
- They view the recent rally as forming a large wedge bear flag (Jul 30, Sep 26, Oct 24).
- They want a second leg sideways to down to retest the October 20 low, even if it only forms a higher low. That move is currently underway.
- If the market trades higher, bears want the 20-week EMA or the October 24 high to act as resistance.
- Crude Oil remains in a large trading range.
- Traders will likely continue to BLSH (Buy Low, Sell High) within the range — buying near the lower third and selling near the upper third — until a clear breakout with sustained follow-through appears.
- Currently, the market is trading near the middle of the range, an area of balance and a magnet.
- The last 3 weeks formed a weak retest of the October low (overlapping ranges, prominent tails below), indicating the bears are not yet strong.
- Traders will watch whether bears can create more follow-through selling to retest the October low.
- Or will the market reverse to close back above the 20-week EMA instead?
- Poor follow-through and frequent reversals are hallmarks of a trading range.
The Daily crude oil chart
- The market traded higher early in the week but reversed below the 20-day EMA on Wednesday. Friday traded higher to retest the 20-day EMA.
- Last week, we said traders would watch if bears could create more follow-through selling below the 20-day EMA, or if bulls would instead create a retest above the October 24 high with follow-through buying.
- Previously, bulls created a reversal from a large wedge bull flag (Jun 24, Aug 13, Oct 20).
- They see the current move as a pullback forming a smaller wedge bull flag (Oct 30, Nov 6, Nov 13) and want the market to form a higher low relative to Oct 20.
- They want a second leg sideways to up, followed by a strong bull leg to retest the top of the trading range.
- Bulls need strong consecutive bull bars trading above the 20-day EMA and the bear trendline to show they are regaining control.
- Bears see the recent move (Oct 24) as a pullback and want a reversal from a large wedge bear flag (Jul 30, Sep 26, Oct 24).
- They want a retest of the recent low (Oct 20), even if it only forms a higher low — which is currently the case.
- They want the bear trendline and the 20-day EMA to act as resistance.
- If the market trades higher, bears want the October 24 high to act as resistance.
- They need to create strong consecutive bear bars to increase the odds of another strong leg down.
- 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.
- That means buying in the lower third and selling in the upper third of the trading range.
- The middle of the range is an area of balance and a magnet.
- So far, the retest of the October low over the last 3 weeks has overlapping ranges, indicating the bears are not yet strong.
- For now, traders will watch if bears can create more follow-through selling below the 20-day EMA.
- Or will bulls create a retest of the October 24 high with follow-through buying instead?
- Poor follow-through and frequent reversals are hallmarks of trading ranges.
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