Market Overview: Crude Oil Futures
The market formed a weekly Crude Oil wedge bull flag. The bulls want a breakout and a measured move based on the height of the tight trading range. The bears want the bear trend line or the 20-week EMA to act as resistance. If the market trades higher, they want the market to form a lower high and the top of the triangle to act as resistance.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a big bull bar closing near its high and above the 20-week EMA.
- Last week, we said the market may trade at least a little lower. Traders would see if the bears could create a breakout below the wedge bear flag (Oct 24, Nov 7, and Nov 22) or if the market would continue to trade within the 8-week tight trading range.
- The market continues to trade within the 8-week tight trading range. The bears were not able to create a breakout below the wedge bear flag.
- The bears want a retest of the October/September lows and the bottom of the triangle from a wedge bear flag (Nov 7, Nov 22, and Dec 13).
- They want the bear trend line or the 20-week EMA to act as resistance.
- If the market trades higher, they want the market to form a lower high and the top of the triangle to act as resistance.
- The bulls see the current move as a three-legged pullback – a wedge bull flag (Oct 29, Nov 18, and Dec 6) and want a reversal to retest the top of the triangle.
- They need to create a follow-through bull bar breaking out above the wedge bull flag to increase the odds of testing the top of the triangle.
- They want a breakout and a measured move based on the height of the tight trading range.
- Since this week’s candlestick is a bull bar closing near its high, it is a buy signal bar for next week.
- The market may trade at least a little higher.
- For now, traders will see if the bulls can create a breakout above the wedge bull flag (Oct 29, Nov 18, and Dec 6) and test the top of the triangle.
- Or will the market continue to chop sideways within the 8-week tight trading range?
- The market has been trading sideways with overlapping candlesticks, poor follow-through and frequent reversals which means the market is in a tight trading range.
- The middle of the trading range is an area of balance and a magnet.
- The lower third of the large trading range can be the buy zone of trading range traders.
- The tight trading range also indicates that the market is in breakout mode. Traders will wait for a strong breakout from either direction with sustained follow-through buying or selling and trade in the direction of the breakout.
- The market is in a large trading range (Trading range high: September 29, Trading range low: May 4).
- Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction with sustained follow-through buying/selling.
The Daily crude oil chart
- The market traded sideways to up for the week closing above the 20-day EMA.
- Last week, we said the market may trade at least a little lower. Traders would see if the bears could create follow-through selling, breaking below the Low 4 pattern or if the market would continue to chop sideways within the tight trading range instead.
- The market continues to chop sideways within the tight trading range.
- The bulls see the current move forming a wedge bull flag (Oct 19, Nov 18, and Dec 6).
- They want a breakout above the tight trading range to retest the top of the triangle and the October 8 high.
- They want a measured move based on the height of the tight trading range.
- The bears want a retest of the October and September lows followed by a breakout below the bottom of the triangle.
- They hope that this week was simply a pullback forming a larger Low 4 sell setup.
- They want the top of the tight trading range and the bear trend line to act as resistance.
- If the market trades higher, they want the market to form a lower high and the top of the triangle to act as resistance.
- So far, the candlesticks in the last 8 weeks have a lot of overlapping ranges which indicates tight trading range price action.
- Poor follow-through and reversals are hallmarks of a trading range.
- For now, traders will see if the bulls can create follow-through buying breaking above the November 7 high.
- Or will the market continue to chop sideways within the tight trading range instead?
- The lower third of the large trading range can be the buy zone of trading range traders.
- The middle of the trading range is an area of balance and a magnet.
- Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction with sustained follow-through buying/selling.
- The tight trading range also indicates that the market is in breakout mode. Traders will wait for a strong breakout from either direction with sustained follow-through buying or selling and trade in the direction of the breakout.
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