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Large Crude Oil Wedge Bear Flag

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Market Overview: Crude Oil Futures

The market formed a large Crude oil wedge bear flag on the weekly chart. The bears must create strong follow-through selling, trading far below the 20-week EMA and the August 13 low to increase the odds of testing the trading range low. The bulls want a reversal from a large wedge bull flag (Jun 24, Aug 13, and Sep 5).

Crude oil futures

The Weekly crude oil chart

Crude Oil Weekly - Wedge Bear Flag, Bears Need FT Selling, Large Crude Oil Wedge Bear Flag
  • This week’s candlestick on the weekly Crude Oil chart was a bear doji closing near its low with a long tail above.
  • Last week, we said traders would see if the bears could create more follow-through selling below the 20-week EMA, or if the market would stall around the August 13 low area, followed by a reversal above the 20-week EMA instead.
  • The market traded above the 20-week EMA but lacked sustained follow-through buying.
  • The bulls view the recent move (Sep 5) as the third leg sideways to down.
  • They want a reversal from a large wedge bull flag (Jun 24, Aug 13, and Sep 5).
  • They hope the 20-week EMA or the August 13 low area will act as support.
  • If the market trades lower, they want the lower third of the trading range to be an area of support.
  • They need to create consecutive bull bars trading far above the 20-week EMA and the bear trend line to show they are back in control. So far, they haven’t been able to do so.
  • The bears view the recent move as forming a larger wedge bear flag (Jul 30, Sep 2, and Sep 16).
  • They see the recent moves as pullbacks and want the 20-week EMA and the bear trend line to act as resistance.
  • They want another strong leg down to test the bottom of the trading range.
  • They must create strong follow-through selling, trading far below the 20-week EMA and the August 13 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.
  • The market has been trading sideways around the 20-week EMA in the last 6 weeks.
  • Traders will see if the bears can create more follow-through selling below the 20-week EMA.
  • Or will the market stall around the August 13 low area, followed by a reversal above the 20-week EMA instead?
  • Poor follow-through and frequent reversals are hallmarks of trading ranges.

The Daily crude oil chart

Crude Oil Daily - Lower High, Bears Need FT Selling
  • The market traded above the 20-day EMA early in the week but lacked sustained follow-through buying. The market then traded lower, closing below the 20-day EMA on Friday.
  • Last week, we said traders would see if the bears could create more follow-through selling or if the market would stall around the August 13 low area, followed by a reversal above the 20-day EMA instead.
  • The bulls see the recent move (Sep 5) as the third leg down, forming a wedge pattern.
  • They want a reversal from a large wedge bull flag (Jun 24, Aug 13, and Sep 5) and a double bottom bull flag (Aug 13 and Sep 5) to retest the trading range high.
  • They want the August 13 low and the 20-day EMA to be areas of support.
  • If the market trades lower, they want the lower third of the trading range to act as support.
  • They need to create strong consecutive bull bars trading far above the 20-day EMA and the bear trend line to show they are back in control.
  • The bears see the recent moves as pullbacks forming a larger wedge bear flag (Jul 30, Sep 2, and Sep 16) and a small double top bear flag (Sep 2 and Sep 16).
  • They want another strong leg down to test the bottom of the trading range.
  • They want the 20-day EMA or the bear trend line to act as resistance. This appears to be the case for now.
  • They must create a strong breakout below the August 13 low with sustained follow-through selling to increase the odds of testing the trading range low (Apr 9).
  • 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 buying in the lower third and selling in the upper 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 bears can create more follow-through selling trading below the August 13 low.
  • Or will the market stall around the August 13 low area, followed by a reversal above the 20-day EMA instead?
  • Poor follow-through and frequent reversals are hallmarks of trading ranges.

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