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Crude Oil Outside Bull Bar

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Market Overview: Crude Oil Futures

The market formed a Crude oil outside bull bar on the weekly chart. Bulls need consecutive strong bull bars closing well above the 20-week EMA and the bear trend line to show they are regaining control. Bears want the 20-week EMA and the bear trend line to act as resistance.

Crude oil futures

The Weekly crude oil chart

Crude Oil Weekly - Outside Bull Bar, Higher Low MTR, Crude Oil Outside Bull Bar
  • This week’s Crude Oil candlestick was an outside bull bar closing in its upper half with a long tail below.
  • Last week, we said traders would watch whether bears could get a second leg sideways to down to retest the December 16 low or whether the market would stall and retest the 20-week EMA and the bear trend line.
  • The market retested the December low on January 7 but reversed up to test the 20-week EMA by Friday.
  • Bulls see the December 16 selloff as a large wedge bull flag (August 13, October 20, and December 16) and a bear leg within a broader trading range.
  • They see the market forming a large higher low major trend reversal relative to the April 9 low.
  • They also see this week as forming a smaller higher low major trend reversal (January 7).
  • Bulls need consecutive strong bull bars closing well above the 20-week EMA and the bear trend line to show they are regaining control.
  • Bears created three sideways-to-down legs (August 13, October 20, and December 16), forming a wedge pattern.
  • Bears got a second leg sideways to down to retest the December 16 low this week, but the January 7 low formed a higher low and lacked sustained follow-through selling.
  • Bears need consecutive strong bear bars breaking below the December 16 low to increase the odds of another strong leg down.
  • Bears want the 20-week EMA and the bear trend line to act as resistance.
  • 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 can act as an area of balance and a magnet, around the $62 area.
  • Buyers may appear near the lower third of the trading range.
  • For now, traders will watch whether bulls can produce a strong follow-through bull bar closing above the 20-week EMA and the bear trend line.
  • Or whether the 20-week EMA and the bear trend line will continue to act as resistance.
  • Poor follow-through and frequent reversals are the hallmarks a trading range environment.

The Daily crude oil chart

Crude Oil Daily - Bulls Want Wedge BF and Higher Low MTR
  • The market retested the December 16 low on Wednesday (January 7) but lacked sustained follow-through selling; it reversed higher from Thursday onward, closing above the 20-day EMA.
  • Previously, we said traders would watch whether bears could get further follow-through selling below the December 16 low or whether the market would stall near that area and reverse back above the 20-day EMA.
  • Bulls see the recent price action as a large wedge bull flag (August 13, October 20, and December 16) and a large higher low major trend reversal relative to the April 9 low.
  • They see the January 7 low as forming a smaller higher low major trend reversal.
  • Bulls need consecutive strong bull bars trading well above the 20-day EMA and the bear trend line to show they are regaining control.
  • If the market trades lower, bulls want the January 7 low area to act as support.
  • Bears created three sideways-to-down legs (August 13, October 20, and December 16), forming a wedge pattern.
  • They want a strong leg down to test the trading range low (April 9).
  • Bears see the current move as a pullback and want the 20-day EMA and the bear trend line to act as resistance.
  • If the market trades higher, bears want the October or November highs to act as resistance, forming another major lower high relative to the September 26 high.
  • Bears need consecutive strong bear bars breaking well below the December 16 low to increase the odds of another strong leg down.
  • The market 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.
  • Buyers may appear near the lower third of the trading range.
  • The middle of the trading range, around the $62 area, can act as an area of balance and a magnet.
  • For now, traders will watch whether bulls can produce strong follow-through buying trading well above the 20-day EMA and the bear trend line.
  • Or whether the market stalls near the 20-day EMA or the bear trend line instead.
  • Poor follow-through and frequent reversals are the hallmarks a trading range environment.

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