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Monthly Crude Oil Bear Leg

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Market Overview: Crude Oil Futures

The market formed a monthly Crude Oil bear leg within the trading range. Bears need sustained follow-through selling breaking below the December low to increase the odds of testing the trading range low. Bulls need consecutive strong bull bars breaking above the 7-bar bear microchannel and the 20-month EMA to show they are regaining control.

Crude oil futures

The Monthly crude oil chart

Crude Oil Monthly - Bears Need Strong FT, Bear Leg, Higher Low, Monthly Crude Oil Bear Leg
  • The December monthly Crude Oil candlestick was a bear bar closing around the middle of its range, with a prominent tail below.
  • Last month, we said traders would watch whether bears could create more follow-through selling below the 20-month EMA, or whether bulls could break strongly above the 6-bar bear microchannel and close back above the 20-month EMA.
  • So far, the market has continued to trade sideways to down.
  • Bears want a bear leg to retest the trading range low (April 9).
  • While the market has traded lower, the move has overlapping ranges, indicating bears are not yet decisively strong.
  • If the market trades higher, bears want the 20-month EMA or the bear trendline to act as resistance.
  • They expect sellers above the 7-bar bear microchannel, followed by at least a small retest of the December 16 low.
  • Bears need sustained follow-through selling breaking below the December low to increase the odds of testing the trading range low.
  • Bulls see the current move as a bear leg within the trading range and want a reversal from a higher low major trend reversal relative to the April 9 low.
  • They want the lower third of the trading range to act as support.
  • Bulls need consecutive strong bull bars breaking above the 7-bar bear microchannel and the 20-month EMA to show they are regaining control.
  • The market remains in a trading range.
  • Traders will continue to Buy Low, Sell High (BLSH), buying near the lower third and selling near the upper third, until a clear breakout with sustained follow-through occurs.
  • The middle of the trading range can act as an area of balance and a magnet.
  • For now, traders will watch whether bears can create more follow-through selling below the December low, or whether bulls can break above the 7-bar bear microchannel and retest the 20-month EMA.
  • There could be sellers above the first pullback following the 7-bar bear microchannel.
  • Poor follow-through and frequent reversals remain hallmarks of trading ranges.

The Weekly crude oil chart

Crude Oil Weekly - Inside Doji, Bears Want 2nd Leg Down
  • This week’s Crude Oil candlestick was an inside bull doji closing in its lower half, with a long tail above.
  • Last week, we said traders would watch whether bears could produce follow-through selling below the December 16 low, or whether the market would stall and retest the 20-week EMA and the bear trend line.
  • So far, the market is trading sideways and remains unable to break strongly above the bear trend line.
  • Bulls view 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.
  • Bulls need consecutive strong bull bars closing well above the 20-week EMA and the bear trend line to show they are gaining control.
  • Bears recently produced the third sideways-to-down leg (August 13, October 20, and December 16).
  • They view the last two weeks as a pullback and want a second leg sideways to down to retest the December 16 low.
  • Bears need consecutive strong bear bars breaking below the December 16 low to increase the odds of another strong leg down.
  • If the market trades higher, bears want the 20-week EMA and the bear trend line to act as resistance.
  • 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.
  • Buyers may appear around the lower third of the trading range.
  • Traders will watch whether bears can produce a second leg sideways to down to retest the December 16 low, or whether the market continues to stall and retest the 20-week EMA and the bear trend line.
  • Poor follow-through and frequent reversals remain hallmarks of a trading range environment.

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