Market Overview: Crude Oil Futures
The Crude oil bulls need follow-through bull bars trading above the 20-week EMA to increase the odds of testing the trading range high. If the market trades higher, the bears want it to form a lower high (vs Jul 30) and a larger double top bear flag.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bull bar closing near its high and above the 20-week EMA.
- 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.
- Previously, the bulls got a bull leg and a buy vacuum (Jun 23) testing the trading range high area.
- The market then formed a deep pullback to the middle of the trading range.
- The bulls view the move (Aug 13) as a second leg sideways to down testing the June 24 low.
- They want a reversal from a large double bottom bull flag (Jun 24 and Aug 13).
- They hope the 20-week EMA and the June 24 low area will act as support.
- They need to create consecutive bars trading far above the 20-week EMA to increase the odds of retesting the trading range high.
- 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 has been limited (Aug 13).
- If the market trades higher, they want it to form a lower high (vs Jul 30) and a larger double top bear flag.
- They want the 20-week EMA or the bear trend line to act as resistance.
- They must create strong bear bars trading far below the 20-week EMA and the June 24 low to increase the odds of 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 bulls can create follow-through buying above the 20-week EMA.
- Or will the market stall below the July 30 high, forming a large double top bear flag in the weeks ahead instead?
- Poor follow-through and frequent reversals are hallmarks of trading ranges.
The Daily crude oil chart
- The market traded sideways in the first half of the week. Thursday traded higher to test the 20-day EMA with some follow-through buying on Friday.
- 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-day EMA instead.
- So far, follow-through selling below the June 24 low has been limited.
- Previously, the bulls created a bull leg and a buy vacuum testing the top of the trading range (Jun 23).
- They see the recent move as a large two-legged pullback.
- They want the June 24 low to be an area of support.
- They want a reversal from a large double bottom bull flag (Jun 24 and Aug 13) to retest the trading range high.
- They need to create strong consecutive bull bars trading far 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 (Aug 13).
- They see the current move (Aug 22) as a small pullback and want another strong leg down.
- They want the 20-day EMA or the bear trend line 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 testing 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 bulls can create more follow-through buying trading above the 20-day EMA.
- Or will the market stall around the 20-day EMA or the bear trend line area, followed by another strong leg down instead?
- Poor follow-through and frequent reversals are hallmarks of trading ranges.
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