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Crude Oil Trading in the Middle of Trading Range

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Market Overview: Crude Oil Futures

On the monthly chart, Crude Oil trading in the middle of trading range in an area of balance and a magnet. If the conflict in the Middle East flares up in the weeks ahead, that will cause the market to be volatile.

Crude oil futures

The Monthly crude oil chart

Crude Oil Monthly - Middle of TR, Bulls Want Retest High, Crude Oil Trading in the Middle of Trading Range
  • The August monthly Crude Oil candlestick was a bear bar closing below the middle of its range with a long tail below.
  • Last month, we said the middle of the trading range is an area of balance and a magnet. Traders would see if the bulls could create more follow-through buying to retest the June 23 high, or if the market would form a pullback to retest the middle of the trading range (20-month EMA) instead.
  • The market formed a pullback and closed around the 20-month EMA.
  • The bears see the move in June as a bull leg and a buy vacuum test of the trading range high.
  • They want the market to form a lower high (Jul 30), followed by a bear leg to retest the trading range low (Apr 9).
  • They need to create follow-through selling below the 20-month EMA to show they are back in control.
  • The bulls got a bull leg and a buy vacuum testing the top of the trading range in June.
  • They view August as a pullback and want a retest of the bull leg extreme high (Jun 23), even if it only forms a lower high.
  • They want the 20-month EMA to act as support.
  • They need to create strong bull bars trading above the 20-month EMA to increase the odds of a retest of the trading range high.
  • The market remains in a trading range.
  • Traders will BLSH (Buy Low, Sell High) when in a trading range until a breakout with sustained follow-through buying/selling.
  • That means buying in the lower third or selling in the upper third of the trading range.
  • The market 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 create a follow-through bear bar trading below the 20-month EMA.
  • Or will the bulls be able to create more bull bars trading above the 20-month EMA instead?
  • Poor follow-through and frequent reversals are hallmarks of trading ranges.
  • If the conflict in the Middle East flares up in the weeks ahead, that will cause the market to be volatile.

The Weekly crude oil chart

Crude Oil Weekly - Bulls Need FT Buying, Middle of TR
  • This week’s candlestick on the weekly Crude Oil chart was a bull doji closing around the middle of its range and above the 20-week EMA.
  • Last week, we said traders would see if the bulls could create follow-through buying above the 20-week EMA, or if the market would stall below the July 30 high, forming a large double top bear flag in the weeks ahead instead.
  • The market traded slightly higher, but the doji bar indicates limited follow-through buying for now.
  • The bulls view the recent move (Aug 13) as a second leg sideways to down, testing the June 24 low.
  • They want a reversal from a large double bottom bull flag (Jun 24 and Aug 13).
  • They hope the 20-week EMA and the June 24 low area will act as support.
  • They need to create consecutive bull bars trading far above the 20-week EMA and the bear trend line to increase the odds of retesting the trading range high.
  • The bears created a second leg sideways to down retesting the June 24 low following the double top bear flag (Jul 14 and Jul 30), but the follow-through selling has been limited (Aug 13).
  • They view the current move as a pullback and want it to form a lower high (vs Jul 30) and a larger double top bear flag (Jul 30 and Aug 25).
  • They want the 20-week EMA or the bear trend line to act as resistance.
  • They must create strong bear bars trading far below the 20-week EMA and the June 24 low to increase the odds of 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 of the trading range, accompanied by 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.
  • For now, traders will see if the bulls can create more follow-through buying above the 20-week EMA.
  • Or will the market stall below the July 30 high, forming a large double top bear flag in the weeks ahead instead?
  • Poor follow-through and frequent reversals are hallmarks of trading ranges.
  • If the conflict in the Middle East flares up in the weeks ahead, that will cause the market to be volatile.

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