Market Overview: Crude Oil Futures
The market formed a monthly Crude Oil tight trading range (sideways overlapping candlesticks, poor follow-through and frequent reversals). The bulls want a reversal from a double bottom bull flag (Jun 4 and Sep 10) and a larger double bottom bull flag (Dec 13 and Sep 10). The bears hope to get another sideways to down leg to retest the September 9 low followed by a breakout below the triangle.
Crude oil futures
The Monthly crude oil chart
- The November monthly Crude Oil candlestick was an inside bear bar closing in its lower half and below the 20-month EMA.
- Last month, we said the market is trading around the middle of the trading range which is an area of balance. The overlapping candlesticks, long tail (Oct), poor follow-through and frequent reversals are hallmarks of trading range price action.
- The bears saw the move in October as a one-bar pullback and want a reversal from a wedge bear flag (Apr 12, Jul 5, and Oct 8).
- They hope to get another sideways to down leg to retest the September 9 low followed by a breakout below the triangle.
- They need to create a strong entry bar in December with follow-through selling to increase the odds of a breakout below the triangle.
- The bulls see the sideways to down move (to Sep 10) as a two-legged pullback.
- They want a reversal from a double bottom bull flag (Jun 4 and Sep 10) and a larger double bottom bull flag (Dec 13 and Sep 10).
- They see October’s rally as breaking the minor bear trend line and want a higher low major trend reversal.
- They want a retest of the triangle top and a strong breakout above.
- If the market trades lower, the bulls want the September low or the bottom of the triangle to act as support.
- Since November’s candlestick is a small inside bear bar closing in its lower half, it can be a sell signal bar for December.
- However, the overlapping candlesticks, poor follow-through and frequent reversals are hallmarks of a tight trading range price action.
- The market is trading around the middle of the trading range which is an area of balance.
- For now, traders will see if the bears can create a strong bear entry bar and a breakout below the September 10 low and triangle pattern.
- Or if the bulls will be able to create a retest of the top of the triangle instead?
- The market is in a trading range (sideways overlapping candlesticks). Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction with sustained follow-through buying/selling.
- The lower third of the large trading range can be the buy zone of trading range traders.
- The increasingly tight triangle pattern indicates that Crude Oil is in a breakout mode.
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was an inside bear bar closing near its low and below the 20-week EMA.
- Last week, we said that the odds slightly favor the market to trade at least a little higher. Traders would see if the bulls could create a strong entry bar by trading above last week’s high or if the market would trade slightly higher but stall around the November 7 high area instead.
- The market traded lower on Monday followed by sideways to down trading for the rest of the week. The market remains in a tight trading range.
- The bears saw last week as a pullback. They want a retest of the October low and the bottom of the triangle from a wedge bear flag (Oct 24, Nov 7, and Nov 22).
- They want the bear trend line or the 20-week EMA to act as resistance. So far this is the case.
- They must create a strong entry bar with follow-through selling to increase the odds of a breakout below the triangle.
- The bulls see the move to November 18 as a two-legged pullback (with the first leg being the Oct 29 low).
- They want a reversal from a wedge bull flag (Oct 1, Oct 29 and Nov 18) followed by a retest of the October 8 high.
- If the market trades lower, they want the October low and the bottom of the triangle to act as supports.
- Since this week’s candlestick is an inside bear bar closing near its low, it is a sell signal bar for next week.
- So far, the bulls have not yet been able to create sustained follow-through buying above the 20-week EMA in the last 6 weeks.
- 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.
- For now, traders will see if the bears can create a strong entry bar by trading below this week’s low.
- Or will the market trade slightly lower but stall and reverse higher instead?
- 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 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.
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