Market Overview: Crude Oil Futures
The market formed a weekly Crude Oil follow-through buying testing near the April high. If there is a pullback, the bulls want at least a small second leg sideways to up to retest the current leg extreme high (now Jan 15). The bears see the current move as a buy vacuum and a bull leg within a trading range.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was another consecutive bull bar closing around the middle of its range with a long tail above.
- Last week, we said that the market may still be in the sideways to up phase. Traders would see if the bulls could create sustained follow-through buying over the next few weeks or if the market would trade slightly higher but stall around the October or July highs area instead.
- The market traded higher testing the July high and near the April high, but the candlestick closed with a long tail above which indicates some selling activity.
- The bulls got a follow-through bull bar following the breakout above the triangle.
- They got a measured move based on the height of the tight trading range which took them to the July high area.
- Next, they want a retest of the April and September highs.
- If there is a pullback, they want at least a small second leg sideways to up to retest the current leg extreme high (now Jan 15).
- The bears want a reversal from a double top bear flag (Jul 5 and Jan 15).
- They hope that the July or April highs will act as resistance.
- They see the current move as a buy vacuum and a bull leg within a trading range.
- They want a retest of the middle of the trading range (around the 20-week EMA area).
- So far, the market formed a bull leg testing the upper third of the large trading range.
- As strong as the move is, it could still only be a buy vacuum and a bull leg within a trading range.
- For now, traders will see if the bulls can continue to create follow-through buying.
- Or will the market stall around the July high area, followed by a pullback in the weeks ahead?
- 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 Daily crude oil chart
- The market traded higher in the first half of the week testing near the April high. Crude Oil then formed an ii (inside inside) pattern.
- Last week, we said that the market may still trade at least a little higher. Traders would see if the bulls could create follow-through buying testing the July high area or if the market would stall around the October 8 high area instead.
- The bulls got a strong breakout, and a measured move based on the height of the tight trading range.
- They hope to get a retest of the top of the trading range (Sep 2023).
- The move up is in a tight trading range. That means strong bulls.
- If there is a pullback, they want at least a small second leg sideways to up to retest the current leg extreme high (now Jan 15).
- The bulls must continue creating follow-through buying to increase the odds of testing the top of the trading range.
- The bears want the market to reverse and retest the middle of the trading range from a double top bear flag (Jul 5 and Jan 15).
- They want the July or April highs to act as resistance.
- They see the current move as a buy vacuum and a bull leg within a trading range.
- They need to create strong bear bars to show that they are back in control.
- Since this week formed an ii (inside inside) pattern, the market is in breakout mode.
- The bears want a breakout below while the bulls want a breakout above the ii pattern. The first breakout can fail 50% of the time.
- So far, the buying pressure since the breakout from the tight trading range is stronger (consecutive bull bars, big bull bars) than the selling pressure (bear bars with no follow-through selling).
- If there is a pullback, odds slightly favor at least a small second leg sideways to up to retest the current leg extreme high (Jan 15).
- Traders will see if the bulls can create more follow-through buying testing the April high area.
- Or will the market stall around the July or April highs area, followed by a pullback to the 20-day EMA instead?
- For now, the current move may still be a buy vacuum and a bull leg within a trading range.
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