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Crude Oil Bulls Need Strong Consecutive Bull Bars

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Market Overview: Crude Oil Futures

The Crude Oil bulls need strong consecutive bull bars closing near their highs and trading far above the October 24 high to increase the odds of a strong bull leg. Bears want another strong leg down from a large wedge bear flag (July 30, September 26, and January 14) and a double top bear flag (October 24 and January 14).

Crude oil futures

The Weekly crude oil chart

Crude Oil Weekly - Bulls Need FT Buying, Bears Want DT BF, Crude Oil Bulls Need Strong Consecutive Bull Bars
  • This week’s Crude Oil candlestick was an inside bull bar closing near its high and trading above the 20-week EMA.
  • Last week, we said traders would watch whether bulls could produce further follow-through buying above the 20-week EMA and the bear trend line, or whether bears could produce strong bear bars reversing below the 20-week EMA.
  • Bulls see the December 16 selloff as a large wedge bull flag (August 13, October 20, and December 16) and a bear leg within a broader trading range.
  • They see the market forming a large higher low major trend reversal relative to the April 9 low, and a smaller higher low major trend (January 7).
  • Bulls need consecutive strong bull bars breaking above the October 24 high to increase the odds of a strong bull leg and a retest of the trading range high.
  • If the market trades lower, bulls want the 20-week EMA to act as support.
  • Bears created three sideways-to-down legs (August 13, October 20, and December 16), forming a wedge pattern.
  • They see the current move as a pullback forming another major lower high relative to the September 26 high.
  • They want another strong leg down from a large wedge bear flag (July 30, September 26, and January 14) and a double top bear flag (October 24 and January 14).
  • If the market trades higher, bears want the October 24 or September 26 highs to act as resistance.
  • Bears need consecutive strong bear bars breaking below the 20-week EMA to increase the odds of another strong leg down.
  • Crude Oil remains in a large trading range.
  • Until there is a clear breakout with sustained follow-through, traders will likely continue to Buy Low, Sell High (BLSH), buying near the lower third and selling near the upper third of the range.
  • The middle of the trading range can act as an area of balance and a magnet, around the $62 area.
  • For now, traders will watch whether bulls can produce consecutive strong bull bars breaking above the October high.
  • Or whether the market stalls around the October high area, followed by a pullback below the 20-week EMA in the weeks ahead.
  • Poor follow-through and frequent reversals remain hallmarks of a trading range environment.

The Daily crude oil chart

Crude Oil Daily - Bulls Need FT Buying, Bears Want DT BF
  • The market tested the 20-day EMA several times this week and traded sideways to up.
  • Last week, we said traders would watch whether bulls could produce further follow-through buying above the 20-day EMA and the bear trend line, or whether bears could produce strong bear bars trading well below the 20-day EMA.
  • Bulls want a reversal from a large wedge bull flag (August 13, October 20, and December 16) and a large higher low major trend reversal relative to the April 9 low.
  • The recent rally broke several bear trend lines, indicating buying pressure, but the deep pullback and overlapping candlesticks this week show bulls are not yet decisively strong.
  • Bulls see the move this week (January 20) as a breakout pullback test of the December 26 breakout point.
  • They want a strong second leg sideways to up, breaking well above the October 24 high.
  • Bulls need consecutive strong bull bars trading well above the 20-day EMA and the October high to show firm control.
  • They want the 20-day EMA to act as support. If the market trades lower, bulls want the January 7 low area to act as support, forming another higher low major trend reversal or a double bottom bull flag.
  • Bears created three sideways-to-down legs (August 13, October 20, and December 16), forming a wedge pattern.
  • They see the current move as a pullback and want the October 24 high to act as resistance, forming another major lower high relative to the September 26 high.
  • Bears want a reversal from a double top bear flag (October 24 and January 14) and a large wedge bear flag (July 30, September 26, and January 14).
  • Bears need consecutive strong bear bars breaking well below the 20-day EMA to increase the odds of another strong leg down.
  • The market remains in a large trading range.
  • Until there is a clear breakout with sustained follow-through, traders will likely continue to Buy Low, Sell High (BLSH), buying near the lower third and selling near the upper third of the range.
  • The middle of the trading range, around the $62 area, can act as an area of balance and a magnet.
  • For now, traders will watch whether bulls can produce further follow-through buying above the October high. If the market trades lower, they will watch whether the market stalls around the 20-day EMA or the January 7 low area.
  • Or whether bears can produce consecutive strong bear bars trading well below the 20-day EMA instead.
  • Poor follow-through and frequent reversals remain hallmarks of a trading range environment.

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