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Monthly Crude Oil Trading Around the Middle of Trading Range

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The monthly Crude Oil trading around the middle of trading range (20-month EMA) for the last few months. The bears need to create follow-through selling below the 20-month EMA to increase the odds of testing the trading range low. The bulls view the current move as a pullback and want it to form a higher low.

Crude oil futures

The Monthly crude oil chart

Crude Oil Monthly - Middle of TR, Small Second Leg Down, Monthly Crude Oil Trading Around the Middle of Trading Range
  • The September monthly Crude Oil candlestick was an inside bear doji closing in its lower half.
  • Last month, we said traders would observe whether the bears could create a follow-through bear bar trading below the 20-month EMA, or if the bulls would be able to create bull bars trading above the 20-month EMA instead.
  • The market traded sideways within the August range, closing slightly below the 20-month EMA.
  • The bears want a bear leg to retest the trading range low (Apr 9).
  • They want the 20-month EMA or the bear trend line to act as resistance.
  • They need to create follow-through selling below the 20-month EMA to increase the odds of testing the trading range low.
  • The bulls view the current move as a pullback and want it to form a higher low.
  • They want a retest of the recent bull leg extreme high (Jun 23), even if it only forms a lower high.
  • They want the 20-month EMA or the August 13 low to act as support.
  • If the market trades lower, they want the lower third of the trading range to act as support.
  • They need to create strong bull bars trading above the 20-month EMA and the bear trend line to increase the odds of a retest of the trading range high.
  • The market remains in a trading range.
  • Traders will BLSH (Buy Low, Sell High) when in a trading range until a breakout with sustained follow-through buying/selling.
  • That means buying in the lower third or selling in the upper third of the trading range.
  • The market is currently trading around the middle of the trading range, which is an area of balance and a magnet.
  • For now, traders will see if the bears can create more follow-through selling below the 20-month EMA.
  • Or will the market stall around the August 13 low area, followed by a reversal above the 20-month EMA instead?
  • Poor follow-through and frequent reversals are hallmarks of trading ranges.

The Weekly crude oil chart

Crude Oil Weekly - No FT Buying, Bears Need FT Selling
  • This week’s candlestick on the weekly Crude Oil chart was a big bear bar closing near its low.
  • Last week, we said traders would observe whether the bulls could create follow-through buying, or if the market would reverse below the 20-week EMA again.
  • The bulls weren’t able to create follow-through buying, and the market reversed below the 20-week EMA.
  • The bulls view the current move (Oct 2) as the third leg sideways to down.
  • They hope the 20-week EMA or the August 13 low area will act as support.
  • They want a reversal from a large wedge bull flag (Jun 24, Aug 13, and Oct 2).
  • They need to create strong bull bars trading above the 20-week EMA and the bear trend line to show they are back in control.
  • The bears view the recent move (Sept 26) as a pullback, forming a larger double top bear flag (Jul 30 and Sep 26).
  • They want the 20-week EMA or bear trend line to act as resistance.
  • They must create follow-through selling below the 20-week EMA 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.
  • The market has been trading sideways around the 20-week EMA in the last 8 weeks.
  • For now, traders will see if the bears can create follow-through selling below the 20-week EMA.
  • Or will the market stall around the August 13 low area and reverse above the 20-week EMA instead?
  • Poor follow-through and frequent reversals are hallmarks of trading ranges.

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