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Weekly Crude Oil Second Leg Down

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Market Overview: Crude Oil Futures

The market formed a weekly Crude oil second leg down to retest the June 24 low. The bears must create strong follow-through selling trading below the June 24 low to increase the odds of the bear leg testing the trading range low. The bulls want the 20-week EMA and the June 24 low area to act as support.

Crude oil futures

The Weekly crude oil chart

Crude Oil Weekly - 2nd Leg Sideways to Down, Middle of TR, Weekly Crude Oil Second Leg Down
  • This week’s candlestick on the weekly Crude Oil chart was a bear doji closing below the middle of its range.
  • Last week, we said traders would see if the bears could create more follow-through selling, or if the market would stall around the June 24 low area and reverse above the 20-week EMA instead.
  • The market traded below the June 24 low, and the bears got some follow-through selling.
  • Previously, the bulls got a bull leg and a buy vacuum (Jun 23) to retest the top of the trading range.
  • The market then formed a deep pullback to the middle of the trading range.
  • They view the current move as a second leg sideways to down retesting the June 24 low.
  • They want the 20-week EMA and the June 24 low area to act as support.
  • They need to create strong bull bars trading above the 20-week EMA to show they are back in control.
  • The bears see the rally (Jun 23) as a bull leg and a buy vacuum within the trading range.
  • They got a second leg sideways to down to retest the June 24 low following the double top bear flag (Jul 14 and Jul 30), but the follow-through selling is not yet strong.
  • They want the bear leg to retest the bottom of the trading range (Apr 9).
  • They must create strong follow-through selling, trading far below the 20-week EMA and the June 24 low to increase the odds of the bear leg testing the trading range low.
  • The market remains in a large trading range.
  • Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction of the trading range, accompanied by sustained follow-through buying/selling.
  • That means selling in the upper third and buying in the lower third of the trading range.
  • The market is currently trading around the middle of the trading range, which is a magnet and an area of balance.
  • For now, traders will see if the bears can create more follow-through selling.
  • Or will the market stall around the June 24 low area and reverse above the 20-week EMA instead?
  • Poor follow-through and frequent reversals are hallmarks of trading ranges.

The Daily crude oil chart

Crude Oil Daily - 2nd Leg Sideways to Down, Bears Need FT
  • The market broke below the June 24 low on Wednesday, but there was no follow-through selling. Thursday traded higher, but there was no follow-through buying on Friday.
  • Last week, we said traders would see if the bears could create follow-through selling, or if the market would stall around the June 24 low area and reverse above the 20-day EMA instead.
  • Previously, the bulls created a bull leg and a buy vacuum testing the top of the trading range (Jun 23).
  • They see the big spike down (Jun 24) as a deep pullback and the current move as a second leg sideways to down to retest the June 24 low
  • They want the June 24 low to be an area of support.
  • They need to create strong consecutive bull bars trading above the 20-day EMA to show they are back in control.
  • The bears view the move up (Jun 23) as a buy vacuum and bull leg within the trading range.
  • They got a retest of the middle of the trading range, followed by a second leg sideways to down, retesting the June 24 low.
  • They want another strong leg down from a small double top bear flag (Aug 8 and Aug 15).
  • If the market trades higher, they want the 20-day EMA to act as resistance.
  • They must create a strong breakout below the June 24 low with sustained follow-through selling to increase the odds of retesting the trading range low (Apr 9).
  • 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 buying in the lower third and selling in the upper third of the trading range.
  • The market is currently trading around the middle of the trading range, which is a magnet and an area of balance.
  • For now, traders will see if the bears can create more follow-through selling, breaking below the June 24 low.
  • Or will the market stall around the June 24 low area and reverse above the 20-day EMA instead?
  • Poor follow-through and frequent reversals are hallmarks of trading ranges.

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