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Crude Oil Pullback to the Middle of Trading Range

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Market Overview: Crude Oil Futures

Crude Oil pullback to the middle of trading range on the weekly chart. The bulls need to create more follow-through buying trading far above the 20-week EMA to increase the odds of the bull leg beginning. The bears hope to get a retest of the March 5 low after the pullback, even if it only forms a higher low.

Crude oil futures

The Weekly crude oil chart

Crude Oil Weekly - Test 20-Week EMA, Middle of TR, Crude Oil Pullback to the Middle of Trading Range
  • This week’s candlestick on the weekly Crude Oil chart was a bull bar closing above the middle of its range with a prominent tail above.
  • Last week, we said traders would see if the bulls could create a follow-through bull bar testing near the 20-week EMA, or if the market would trade slightly higher but close with a long tail or a bear body instead.
  • The bulls got a follow-through bull bar testing the 20-week EMA but it did not close above it.
  • They see the recent move as a large two-legged bear leg within the trading range.
  • They want the bull leg within the trading range to begin.
  • They need to create more follow-through buying trading far above the 20-week EMA to increase the odds of the bull leg beginning.
  • Previously, the bears got a large two-legged bear leg to test the November 18 low area.
  • The move was a weaker bear leg (many overlapping ranges, doji bars and prominent tails below candlesticks).
  • They see the last two weeks simply as a pullback.
  • They want the 20-week EMA to act as resistance.
  • They hope to get a retest of the March 5 low after the pullback, even if it only forms a higher low.
  • So far, the market is trading around the middle of the large trading range which is an area of balance and a magnet.
  • 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.
  • Poor follow-through and frequent reversals are hallmarks of a trading range price action.
  • For now, traders will see if the bulls can create a follow-through bull bar closing above the 20-week EMA.
  • If the bulls can create strong consecutive bull bars trading far above the 20-week EMA, that would swing the odds in favor of the bull leg beginning.
  • Or will the market stall around the 20-week EMA followed by a retest of the March 5 low in the weeks ahead instead?

The Daily crude oil chart

Crude Oil Daily - Persistent Buying, Wedge Bear Flag
  • The market traded sideways to up in the first half of the week followed by sideways trading on Thursday and Friday.
  • Last week, we said the market could still be in the sideways to up pullback phase. Traders would see if the bulls could continue to create more follow-through buying trading far above the 20-day EMA, or if the market would trade sideways with overlapping ranges instead.
  • So far, the market traded slightly higher to test near the March 3 high area. The move has overlapping candlesticks and doji bars.
  • Previously, the bears got a large two-legged sideways to down bear leg within the trading range.
  • They see the current move forming a wedge bear flag (Mar 7, Mar 13, and Mar 26).
  • They want the 20-day EMA or the March 3 high to act as resistance.
  • They want at least a small sideways to down leg to retest the recent leg extreme low (Mar 5) after the pullback.
  • The bulls see the recent move (to Mar 5 low) as a large two-legged bear leg within the trading range.
  • They want a reversal from a wedge pattern (Jan 27, Feb 26, and Mar 5) and a higher low major trend reversal (Mar 19).
  • If the market trades lower, they want the 20-day EMA to act as support.
  • They want a higher low and double bottom bull flag with the March 19 low.
  • They need to create strong consecutive bull bars closing near their highs trading far above the 20-day EMA and the March 3 high to show they are back in control.
  • So far, the market has traded sideways to up in the last 19 trading days.
  • The move since the March 19 low was in the form of a 7-bar bull microchannel which means persistent buying.
  • There may be buyers below the pullback on Friday.
  • For now, the market could still be in the sideways to up pullback phase (in the first half of next week).
  • Traders will see if the bulls can continue to create more follow-through buying trading far above the 20-day EMA.
  • Or will the market stall around the March 3 high area instead?
  • The market is trading around the middle of the trading range. It is an area of balance and a magnet.
  • The market remains in a large trading range. Traders will BLSH (Buy Low, Sell High) within the trading range.
  • That means buying in the lower third and selling in the upper third of the trading range.

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