Market Overview: Crude Oil Futures
The market formed a weekly Crude Oil double top bear flag, stalling below the April 23 high. The bulls see this week simply as a pullback and want a second leg sideways to up. The bears need to create a strong bear entry bar to increase the odds of retesting the May 5 low.
Crude oil futures
The Weekly crude oil chart
- This week’s candlestick on the weekly Crude Oil chart was a bear doji closing slightly below the middle of its range with long tails above and below.
- Last week, we said traders would see if the bulls could create another follow-through bull bar, breaking above the April 23 high, or if the market would stall below the April 23 high, forming a double top bear flag instead.
- The market traded slightly higher but stalled below the April 23 high.
- The bulls saw the prior selloff as a sell vacuum and a bear leg within the trading range.
- They want a reversal from a wedge pattern (Mar 5, Apr 9, and Mar 5) and a higher low major trend reversal (May 5).
- They hope to get a retest of the middle of the trading range (around the $67 area).
- They see this week simply as a pullback and want a second leg sideways to up.
- If the market trades lower, they want it to form a higher low and the lower third of the trading range to act as support.
- They need to create follow-through buying trading above the April 23 high to increase the odds of the bull leg beginning.
- The bears got a 3-legged bear leg (Mar 5, Apr 9, and Mar 5) testing the bottom of the trading range.
- They see the current move as a pullback and want a reversal from a double top bear flag (Apr 23 and May 21).
- They want the April 23 high or the 20-week EMA to act as resistance.
- They need to create a strong bear entry bar to increase the odds of retesting the May 5 low.
- While the prior selloff was strong (Apr 9, May 5), it could still be a sell vacuum and a bear leg testing the bottom of the trading range.
- For now, traders will see if the bears can create a follow-through bar which would increase the odds of a retest of the May 5 low.
- Or will the market continue to trade sideways followed by a retest above the April 23 high instead?
- If the market continues to stall below the April 23 high, we will likely see more selling pressure return within the next few weeks.
- 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 selling in the upper third and buying in the lower third of the trading range.
- Poor follow-through and frequent reversals are hallmarks of trading ranges.
The Daily crude oil chart
- The market traded sideways early in the week. Wednesday traded higher but reversed into a bear reversal bar. Crude oil traded lower on Thursday and Friday with limited follow-through selling.
- Last week, we said traders would see if the bulls can create more follow-through buying, breaking above the April 23 high, or if the market would stall below the April 23 high area, followed by another leg down instead.
- So far, the market has traded slightly higher but has not yet broken above the April 23 high.
- The bulls want a reversal from a wedge pattern (Mar 5, Apr 9, and May 5) and a higher low major trend reversal (May 5).
- They see the market forming a small double bottom bull flag (May 15 and May 23).
- They want a retest of the middle of the trading range and the bull leg to begin.
- They need to create a breakout above the April 23 high with follow-through buying to increase the odds of higher prices.
- They want the 20-day EMA to act as support.
- If the market trades lower, they want it to form a higher low (vs the May 5 low).
- The bears see the current move as a pullback and want the 20-day EMA or the April 23 high to act as resistance.
- They want a reversal from a double top bear flag (Apr 23 and May 21).
- They must create strong bear bars trading below the 20-day EMA to show they are back in control.
- For now, traders will see if the bears can create follow-through selling to retest the May 5 low.
- Or will the bulls be able to create a breakout above the April 23 high instead?
- If the market continues to stall below the April 23 high, the odds of another leg down to retest the May 5 low will increase.
- The market is currently in a large trading range.
- Traders will BLSH (Buy Low, Sell High) within the trading range.
- That means buying in the lower third and selling in the upper third of the trading range.
- Poor follow-through and frequent reversals are hallmarks of a trading range.
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