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Weekly Crude Oil Large Double Top Bear Flag

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Market Overview: Crude Oil Futures

The market is forming a weekly Crude oil large double top bear flag (Jul 30 and Sep 2). The bears must create strong follow-through selling far below the 20-week EMA and the August 13 low to increase the odds of testing the trading range low. The bulls hope the 20-week EMA or the August 13 low area will act as support.

Crude oil futures

The Weekly crude oil chart

Crude Oil Weekly - DT Bear Flag, Bears Need FT Selling, Weekly Crude Oil Large Double Top Bear Flag
  • This week’s candlestick on the weekly Crude Oil chart was an outside bear bar closing near its low with a long tail above.
  • Last week, we said traders would see if the bulls could create more follow-through buying above the 20-week EMA, or if the market would stall below the July 30 high, forming a large double top bear flag in the weeks ahead instead.
  • The market traded higher but formed a lower high (vs Jul 30) and reversed below the 20-week EMA.
  • The bulls view the current move as the third leg sideways to down.
  • They hope the 20-week EMA or the August 13 low area will act as support.
  • If the market trades lower, they want the lower third of the trading range to be areas of support.
  • They need to create consecutive bull bars trading far above the 20-week EMA and the bear trend line to show they are back in control.
  • The bears view the recent move (Sep 2) as a pullback and want it to form a lower high (vs Jul 30) and a larger double top bear flag (Jul 30 and Sep 2). So far, this appears to be the case.
  • They want another strong leg down to test the bottom of the trading range.
  • They must create strong follow-through selling far below the 20-week EMA and the August 13 low 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.
  • Since this week’s candlestick is an outside bear bar closing near its low, it can be a sell signal bar for next week.
  • The market could still trade at least a little lower.
  • Traders will see if the bears can create a strong follow-through bear bar below the 20-week EMA.
  • Or will the market trade lower, but stall around the August 13 low area instead?
  • Poor follow-through and frequent reversals are hallmarks of trading ranges.

The Daily crude oil chart

Crude Oil Daily - DT Bear Flag, Bears Need FT Selling
  • The market traded higher on Tuesday, but there was no follow-through buying. The market closed below the 20-day EMA on Thursday with follow-through selling on Friday.
  • Previously, we said traders would see if the bulls could create more follow-through buying trading above the 20-day EMA, or if the market would stall around the 20-day EMA or the bear trend line area, followed by another strong leg down instead.
  • The market stalled around the bear trend line area and formed another leg down this week.
  • The bulls see the current move as the third leg down, forming the wedge pattern.
  • They want the August 13 low to be an area of support.
  • They want a reversal from a large wedge bull flag (Jun 24, Aug 13, and Sep 5) to retest the trading range high.
  • If the market trades lower, they want the lower third of the trading range to act as support.
  • They need to create strong consecutive bull bars trading far above the 20-day EMA and the bear trend line to show they are back in control.
  • The bears see the recent move (Sep 2) as a pullback forming a larger double top bear flag (Jul 30 and Sep 2).
  • They want another strong leg down to test the bottom of the trading range.
  • They want the 20-day EMA or the bear trend line to act as resistance.
  • They must create a strong breakout below the August 13 low with sustained follow-through selling to increase the odds of testing the trading range low (Apr 9).
  • 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 buying in the lower third and selling in the upper 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.
  • For now, traders will see if the bears can create more follow-through selling trading below the August 13 low.
  • Or will the market trade slightly lower but stall around the August 13 low area instead?
  • Poor follow-through and frequent reversals are hallmarks of trading ranges.

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