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Crude Oil Higher Low Major Trend Reversal

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Market Overview: Crude Oil Futures

The market formed a Crude oil higher low major trend reversal (December 16) relative to the April 9 low. Bulls need additional follow-through buying to increase the odds of a sustained move. Bears want the market to reverse from a double top bear flag (September 26 and January 29).

Crude oil futures

The Monthly crude oil chart

Crude Oil Monthly - Bulls Need Follow-through Bull Bar, Crude Oil Higher Low Major Trend Reversal
  • The January monthly Crude Oil candlestick was a large bull bar closing near its high and above the 20-month EMA.
  • Last month, we said traders would watch whether bears could create more follow-through selling below the December low or whether bulls could break above the 7-bar bear microchannel and retest the 20-month EMA.
  • The candlestick closed above the closes of the prior four bars and above the highs of the prior three bars, indicating strong buying pressure.
  • Bears see the move as a buy vacuum retesting the middle of the trading range.
  • They want the September or July highs, or the bear trend line, to act as resistance and for the rally to form a lower high.
  • Bears hope the move will have weak follow-through buying and reverse back below the 20-month EMA.
  • Bulls got a reversal from a wedge bull flag (August 13, October 20, and December 16) and a higher low major trend reversal relative to the April 9 low.
  • Bulls need a strong follow-through bull bar to increase the odds of a strong bull leg testing the trading range high.
  • The next targets for bulls are the July 30 and June 23 highs.
  • The market remains in a trading range.
  • Until there is a clear breakout with sustained follow-through, traders will continue to Buy Low, Sell High (BLSH), buying near the lower third and selling near the upper third of the range.
  • The middle of the trading range, around the $62–$63 area, can act as a magnet and area of balance.
  • For now, traders will watch whether bulls can create a follow-through bull bar. If they do, especially if it is strong, it would increase the odds of a retest of the trading range high.
  • Or whether the market trades slightly higher but stalls around the September or July highs area, closing with a long tail or bear body instead.
  • Poor follow-through and frequent reversals remain hallmarks of trading ranges.

The Weekly crude oil chart

Crude Oil Weekly - Bears Want DT BF, Bulls Need FT Buying
  • This week’s Crude Oil candlestick was a large bull bar closing in the upper half of its range with a prominent upper tail, testing the September 26 high.
  • Last week, we said traders would watch whether bulls could produce consecutive strong bull bars breaking above the October high or whether the market would stall near that level, followed by a pullback below the 20-week EMA in the weeks ahead.
  • Bulls got a reversal from a large wedge bull flag (August 13, October 20, and December 16) and a major higher low trend reversal relative to the April 9 low.
  • Bulls want a strong bull leg to retest the trading range high.
  • The next target for bulls is the July 30 high.
  • They need additional follow-through buying to increase the odds of a sustained move.
  • If the market trades lower, bulls hope for at least a small sideways-to-up leg to retest the current leg high (January 29).
  • Bears see the current move as a buy vacuum test of the September 26 high and the middle of the trading range.
  • They want the market to reverse from a double top bear flag (September 26 and January 29).
  • If the market trades higher, bears want the July 30 high to act as resistance.
  • Bears need consecutive strong bear bars to show they are regaining control.
  • Crude Oil remains in a large trading range.
  • Until there is a clear breakout with sustained follow-through, traders will likely continue to Buy Low, Sell High (BLSH), buying near the lower third and selling near the upper third of the range.
  • The middle of the trading range, around the $62–$63 area, can act as a magnet and area of balance.
  • For now, traders will watch whether bulls can produce more follow-through buying and break above the September 26 high.
  • Or whether the market stalls around the September 26 or July 30 highs area instead.
  • Poor follow-through and frequent reversals remain hallmarks of a trading range environment.

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