Market Overview: Crude Oil Futures
The Crude Oil bulls need follow-through buying trading back above the 20-week EMA. They want the bull leg within the trading range to begin. The bears want the bear trend line or the 20-week EMA to act as resistance.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bull bar closing near its high with a prominent tail below.
- Last week, we said traders would see if the bears could create follow-through selling testing the November 18 low area or if the market would continue to stall around the March 5 low area followed by a reversal to the middle of the trading range instead (around the 20-week EMA).
- So far, the market stalled around the March 5 low area and is forming a pullback towards the middle of the trading range.
- The bears got a large two-legged sideways to down move to test the November 18 low area.
- The move down is in a weaker bear leg (many overlapping ranges, doji bars and prominent tails below candlesticks).
- They see this week simply as a pullback. They hope to get a retest of the March 5 low after the pullback.
- They want the bear trend line or the 20-week EMA to act as resistance.
- The bulls see the recent move as a large two-legged bear leg.
- They hope the November low area or the lower third of the trading range will be an area of support. So far, this is the case.
- They want the bull leg within the trading range to begin.
- They need to create follow-through buying and trading back above the 20-week EMA to show they are back in control.
- So far, the market is trading slightly below the middle of the large trading range. The middle of the trading range 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 testing near the 20-week EMA.
- Or will the market trade slightly higher but close with a long tail or a bear body instead?
- If the pullback is weak and lacks follow-through buying, the odds of a retest of the November 18 low will increase.
- If the bulls can create strong consecutive bull bars trading far above the 20-week EMA or the bear trend line, that would swing the odds in favor of the bull leg beginning.
The Daily crude oil chart
- The market traded sideways to up for the week, closing above the 20-day EMA.
- Last week, we said traders would see if the bears could create follow-through selling trading below the November 18 low area or if the market would continue to stall around the March 5 area followed by a pullback above the 20-day EMA instead.
- The bears got a large two-legged sideways to down move (with the first leg being the Jan 15 high to the Feb 6 low).
- They see the current sideways trading forming a wedge bear flag (Mar 7, Mar 13, and Mar 21).
- They want the 20-day EMA, the bear trend line or the March 3 high to act as resistance.
- They want at least a small sideways to down leg to retest the current leg extreme low (Mar 5) after the pullback.
- The bulls see the recent move 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 it to form another higher low and a small double bottom bull flag with the March 19 low.
- They need to create consecutive bull bars closing near their highs breaking far above the 20-day EMA and the bear trend line to show they are back in control.
- So far, the market has traded sideways to up in the last 14 trading days.
- The move has the shape of a wedge bear flag with a lot of overlapping candlesticks. The bulls are not yet as strong as they hope to be.
- For now, the market could still be in the sideways to up pullback phase.
- 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 continue to trade sideways with overlapping ranges?
- If the bulls can create strong follow-through buying, we could see a pullback towards the middle of the trading range.
- If the pullback remains sideways and weak, the odds of a retest of the March 5 low will increase.
- 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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