Market Overview: Crude Oil Futures
Crude oil is testing the middle of the trading range this week, an area of balance that often acts as a magnet. Bulls want a retest of the March 9 high, even if it forms a lower high. Bears see the current move as a pullback and want it to form a lower high, followed by another leg sideways to down.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick was an inside bull bar closing in its upper half with prominent tails, testing the middle of the trading range.
- Last week, we said traders would watch whether bears could generate follow-through selling or whether the market would stall near the 20-week EMA and move toward the middle of the range.
- Bulls see the recent move as a deep pullback and want the 20-week EMA to act as support.
- They want a retest of the March 9 high, even if it forms a lower high.
- Bulls need follow-through buying to increase the odds of a bull leg retesting the range high.
- Bears generated a strong selloff from a double top and a lower high major trend reversal.
- They see the current move as a pullback and want it to form a lower high, followed by another leg sideways to down.
- Bears need strong bear bars closing below the 20-week EMA to increase the odds of a successful reversal.
- The market formed a deep pullback (April 17) and is now testing the middle of the trading range.
- The middle of the range is an area of balance and often acts as a magnet.
- The market remains in a trading range with overlapping price action. Traders may continue Buy Low, Sell High (BLSH)—buying near the lower third and selling near the upper third of the range.
- Traders will watch whether bulls can generate follow-through buying to retest the March 9 high, or whether the market continues to stall around the middle of the range.
- External factors, such as developments in the Middle East, could accelerate or reverse the current move.
The Daily crude oil chart
- The market traded higher this week, closing above the 20-day EMA and testing the middle of the trading range.
- Last week, we said traders would watch whether bears could generate follow-through selling below the March 10 low, or whether the market would stall and retest the middle of the range or the April 13 high.
- Bulls see the recent move as forming a large double bottom bull flag (March 23 and April 17) and a wedge bull flag (April 8, April 15, and April 17).
- Bulls want a retest of the March 9 high, even if it forms a lower high.
- If the market pulls back, bulls want a higher low relative to April 17 low.
- Bulls want the 20-day EMA to act as support.
- Bears got a deep pullback from a double top and a lower high major trend reversal.
- They see the current move as a retest of the prior high and want a double top bear flag (April 13 and April 23), followed by a larger second leg sideways to down.
- Bears need consecutive bear bars closing near their lows and trading below the 20-day EMA to increase the odds of a successful reversal.
- The March 9 bar is a large one-bar trading range, where traders may continue Buy Low, Sell High (BLSH)—buying near the lower third and selling near the upper third of the range.
- The market has transitioned into a broad trading range.
- The market is near the middle of the range, which is an area of balance and often acts as a magnet.
- Traders will watch whether bulls can generate follow-through buying to retest the March 9 high, or whether the market stalls and develops a deeper pullback below the 20-day EMA.
- External factors, such as developments in the Middle East, could accelerate or reverse the current move.
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