Market Overview: Crude Oil Futures
The monthly Crude Oil trading range is currently trading around the middle of its range which is an area of balance. The bulls want a retest of the recent leg extreme high (Jun 23), even if it only forms a lower high. The bears hope to get a retest of the trading range low (Apr 9 low) followed by a breakout below.
Crude oil futures
The Monthly crude oil chart
- The June monthly Crude Oil candlestick was a bull bar closing in its lower half with a long tail above.
- Last month, we said the market was trading around the lower third of the trading range which can be the buy zone for trading range traders. Traders would see if the bulls could create a follow-through bull bar in June, or if the bears could create a retest of the April 9 low instead.
- The market traded higher to test the top of the trading range but closed far below its high.
- The bears see June as a bull leg and a buy vacuum test of the trading range high.
- They hope to get a retest of the trading range low (Apr 9 low) followed by a breakout below.
- They need to create strong bear bars to show they are back in control.
- The bulls got a bull leg and a buy vacuum testing the top of the trading range in June.
- However, they couldn’t create a strong breakout above the trading range.
- They see the current move as a pullback testing the middle of the trading range (around the 20-Month EMA).
- They want a retest of the recent leg extreme high (Jun 23), even if it only forms a lower high.
- They want the 20-month EMA to act as support.
- The recent strong rally could still be a buy vacuum and a bull leg within the trading range.
- Until a breakout with strong follow-through buying/selling, the market remains in a trading range.
- Markets have inertia and tend to continue what they have been doing.
- 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.
- For now, traders will see if the bulls can create a retest of the June 23 high.
- Or will the bears be able to create a retest of the April 9 low instead?
- Poor follow-through and frequent reversals are hallmarks of trading ranges.
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was an inside bull bar closing in its upper half with prominent tails.
- Last week, we said traders would see if the bears could create a follow-through bear bar trading below the 20-week EMA, or if the move would lack follow-through selling and trade sideways for a few weeks around the 20-week EMA instead.
- So far, there has been no follow-through selling and the market traded sideways around the 20-week EMA.
- Previously, the bulls got a bull leg and a buy vacuum to retest the top of the trading range.
- The market then formed a deep pullback to the middle of the trading range.
- The bulls want the 20-week EMA to act as support followed by a retest of the June 23 high, even if it only forms a lower high.
- The bears see the rally (Jun 23) as a bull leg and a buy vacuum within the trading range.
- They want the bear leg to retest the bottom of the trading range (Apr 9).
- They see this week as a pullback and want another strong leg down.
- They must create follow-through selling below the 20-week EMA to increase the odds of the bear leg 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 with 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.
- Traders will see if the bears can create another leg down by trading below the 20-week EMA.
- Or will the market trade sideways around the 20-week EMA for a few weeks instead?
- Poor follow-through and frequent reversals are hallmarks of trading ranges.
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