Market Overview: Crude Oil Futures
The market formed a Crude Oil test middle of the trading range and the 20-week EMA. The bulls hope to get a retest of the recent high (Jun 23), even if it only forms a lower high. The bears must create follow-through selling trading below the 20-week EMA to increase the odds of the bear leg testing the trading range low.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a big bear bar closing near its low with a small tail below.
- Last week, we said traders would 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.
- The market opened higher but lacked follow-through buying and reversed sharply to test the 20-week EMA and the middle of the trading range.
- The bulls got a bull leg and a buy vacuum to retest the top of the trading range.
- They see the current move as a retest of the middle of the trading range and want a higher low.
- They hope to get a retest of the recent high (Jun 23), even if it only forms a lower high.
- The bears see the recent move as a bull leg and a buy vacuum within the trading range.
- They want the upper third of the trading range to act as resistance. So far, this is the case.
- They must create follow-through selling trading 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 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 a follow-through bear bar trading below the 20-week EMA.
- Or will the move lack follow-through selling and the market trade sideways for a few weeks around the 20-week EMA instead?
- Poor follow-through and frequent reversals are hallmarks of trading ranges.
The Daily crude oil chart
- The market opened higher on Monday but reversed sharply with follow-through selling on Tuesday. The market then traded sideways for the rest of the week.
- Last week, we said the market was trading around the upper third of the trading range which can be the sell zone of trading range traders. Traders would BLSH (Buy Low, Sell High) until there is a breakout from either direction with sustained follow-through buying/selling.
- The bulls got a bull leg and a buy vacuum testing the top of the trading range.
- They see the current move as a deep pullback testing the middle of the trading range and the 20-day EMA.
- They want the 20-day EMA to act as support, forming a higher low.
- They want a retest of the recent high (Jun 23), even if it only forms a lower high.
- The bears see the recent move as a buy vacuum and bull leg within the trading range.
- They want the upper third of the trading range to act as resistance. So far, this is the case.
- They must create sustained follow-through selling below the 20-day EMA to increase the odds of the bear leg testing the bottom of the trading range.
- Because of the strong selloff, traders may expect at least a small second leg sideways to down to retest the Jun 24 low.
- 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.
- 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 get a strong second leg sideways to down.
- Or will the market trade slightly lower but lack follow-through selling instead?
- Poor follow-through and frequent reversals are hallmarks of trading ranges.
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