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Weekly Crude Oil Bulls Need Follow-through Buying

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Market Overview: Crude Oil Futures

The weekly Crude Oil bulls need follow-through buying trading above the April 23 high and the 20-week EMA. The bears see the current move as a pullback and want a reversal from a double top bear flag (Apr 23 and Jun 6) or a wedge bear flag (Apr 23, May 21, and Jun 6).

Crude oil futures

The Weekly crude oil chart

Crude Oil Weekly - Bulls Need Follow-through Buying, Weekly Crude Oil Bulls Need Follow-through Buying
  • This week’s candlestick on the weekly Crude Oil chart was a big bull bar closing near its high and above the 20-week EMA.
  • Last week, we said traders would see if the bears could create a follow-through bar, or if the market would continue to trade sideways (disappointing for the bears), increasing the odds of a retest above the April 23 high.
  • The market formed a second leg sideways to up closing slightly above the April 23 high.
  • The bulls saw the prior selloff as a sell vacuum and a bear leg within the trading range.
  • They want a reversal from a wedge pattern (Mar 5, Apr 9, and Mar 5) and a higher low major trend reversal (May 5).
  • They hope to get a retest of the middle of the trading range (around the $67 area).
  • They see the prior 3 weeks simply as a pullback and want a second leg sideways to up. The move may be underway.
  • Since this week closed above the 20-week EMA and the April 23 high, the bulls need to create a follow-through bull bar to increase the odds of the bull leg beginning.
  • The bears got a 3-legged bear leg (Mar 5, Apr 9, and Mar 5) testing the bottom of the trading range.
  • They see the current move as a pullback and want a reversal from a double top bear flag (Apr 23 and Jun 6) or a wedge bear flag (Apr 23, May 21, and Jun 6).
  • They want the April 23 high or the 20-week EMA to act as resistance.
  • They must create strong bear bars to show they are back in control.
  • While the prior selloff was strong (Apr 9, May 5), it could still be a sell vacuum and a bear leg testing the bottom of the trading range.
  • 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.
  • The middle of the trading range can be a magnet.
  • For now, the market could still trade slightly higher.
  • Traders will see if the bulls can create a strong follow-through bar above the 20-week EMA. If yes, the odds of retesting the middle of the trading range will increase.
  • Or will the market trade slightly higher but close with a long tail or a bear body and trade below the 20-week EMA instead?
  • Poor follow-through and frequent reversals are hallmarks of trading ranges.

The Daily crude oil chart

Crude Oil Daily - Bulls Need Follow-through Buying
  • The market traded higher on Monday followed by sideways trading. Friday formed a breakout above the midweek small trading range.
  • Previously, we said traders would see if the bears could create follow-through selling to retest the May 5 low or if the bulls could create a breakout above the April 23 high instead.
  • The recent follow-through selling has been limited, holding around the 20-day EMA. The bulls got a breakout above the April 23 high this week.
  • The bulls want a reversal from a wedge pattern (Mar 5, Apr 9, and May 5) and a higher low major trend reversal (May 5).
  • They see the market forming a wedge bull flag (May 15, May 23 and May 30) and want another strong leg up.
  • They want a retest of the middle of the trading range and the bull leg to begin.
  • They must create a strong breakout above the April 23 high with follow-through buying to increase the odds of higher prices.
  • If the market trades lower, they want the 20-day EMA to act as support.
  • The bears see the current move as a pullback and want a reversal from a wedge bear flag (Apr 23, May 21, and Jun 6).
  • They want the April 23 high area and the bear trend line to act as resistance.
  • They must create strong bear bars trading below the 20-day EMA to show they are back in control.
  • For now, the market could still trade slightly higher.
  • Traders will see if the bulls can create strong follow-through buying above the April 23 high. If yes, the odds of retesting the $67-70 area will increase.
  • Or will the bears be able to create a pullback below the 20-day EMA instead?
  • Poor follow-through and frequent reversals are hallmarks of trading ranges.

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