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Crude Oil Bears Want a Strong Bear Leg

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Market Overview: Crude Oil Futures

The Crude Oil bears want a strong bear leg to retest the November low area. They need to create a follow-through bear bar following this week’s close below the 20-week EMA. The bulls need to create strong bull bars closing near their highs to show that they are back in control. They want the 20-week EMA to act as support.

Crude oil futures

The Weekly crude oil chart

Crude Oil Weekly - Bears Want Retest Nov Low, Crude Oil Bears Want a Strong Bear Leg
  • This week’s candlestick on the weekly Crude Oil chart was a bear doji closing in its lower half with a long tail above.
  • Last week, we said that traders would see if the bears could create more follow-through selling trading below the 20-week EMA or if the market would stall around the 20-week EMA followed by a retest of the January 15 high in the next few weeks (even if it forms a lower high).
  • This week’s candlestick traded slightly lower and had a lot of overlapping range with last week’s candlestick.
  • The bears got some follow-through selling closing slightly below the 20-week EMA.
  • The move down is in a tight bear channel which means persistent selling.
  • The last 3 candlesticks had a lot of overlapping ranges which indicates weaker momentum.
  • Since this week closed below the 20-week EMA, the bears need to create a follow-through bear bar to increase the odds of testing the November low area.
  • The bulls see the current move as a deep pullback and a retest of the breakout point (top of the tight trading range).
  • They hope to get a retest of the January 15 high, even if it forms a lower high.
  • The market attempted to trade higher in the last two weeks (Feb 3 and Feb 11) but the follow-through buying was limited.
  • They need to create strong bull bars closing near their highs to show that they are back in control.
  • They want the 20-week EMA to act as support.
  • The market is currently trading around the middle of the large trading range which is an area of balance and a magnet.
  • The overlapping ranges in the last 3 weeks indicate slightly weaker momentum.
  • Attempts to trade higher in the last two weeks (Feb 3 and Feb 11) had limited follow-through buying which indicates the bulls are not yet as strong as they hope to be.
  • For now, traders will see if the bears can create more follow-through selling following this week’s close below the 20-week EMA.
  • Or will the market continue to stall around the 20-week EMA followed by a pullback higher within the next few weeks instead?
  • 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

Crude Oil Daily - Bears Want Larger 2nd Leg
  • The market traded higher early in the week testing the 20-day EMA. The market then traded sideways to down from midweek onwards.
  • Last week, we said that traders would see if the bears could continue to create more follow-through selling to retest the trading range low or if the market would stall around the middle of the trading range followed by a pullback.
  • The bears got another sideways to down leg testing the middle of the trading range.
  • They want a retest of the bottom of the trading range from a double top bear flag (Feb 3 and Feb 11).
  • They want a larger second leg sideways to down (with the first leg being the Jan 15 high to the Jan 27 low).
  • If the market trades higher, they want the 20-day EMA or the bear trend line to act as resistance.
  • The bulls see the current move as a deep pullback testing the breakout point (the top of the tight trading range) and the middle of the trading range.
  • They want a reversal from a wedge pattern (Jan 27, Feb 6 and Feb 13).
  • They hope the middle of the trading range will be an area of support.
  • They need to create consecutive bull bars closing near their highs breaking far above the bear trend line and 20-day EMA to show they are back in control.
  • So far, the move down is in a bear channel with overlapping ranges in the last 3 weeks.
  • While that could mean weaker selling momentum, the bulls need to do more to show that they are back in control.
  • Crude Oil is currently trading around the middle of the trading range which is an area of balance and a magnet.
  • For now, traders will see if the bears can continue to create more follow-through selling to retest the November low area.
  • Or will the market continue to stall around the middle of the trading range followed by a pullback instead?
  • The bear leg within the trading range is currently underway. The market could still trade slightly lower.

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