Downward Oil Trading Trend-Lines & Channels
Downwards Oil Trading Trend Line MT4 Oil Trading Trend Line Indicator
A downward oil trend-line is plotted above the downwards oil trend pattern formed by consecutive lower highs, the downward oil trend-line must connect at-least 2 highs, with the most recent high being lower. For our downward oil trend examples we shall use the MT4 technical analysis software oil charts to illustrate example of downward oil trend.
Since crude oil price moves downward in a zigzag manner oil traders normally draw a downward oil trend-line which shows the general downward direction of the oil prices. In oil market technical analysis, this general crude oil price direction is referred to as the TREND by crude oil traders. In crude oil trading analysis definition we can define this oil trading down oil trend line is drawn on Oil chart showing the resistance areas (bearish market direction).
A oil trading down oil trend occurs when the crude oil price forms a series of lower highs and lower lows. Each price high is lower than the previous high - lower high, & each low is lower than previous low - lower low therefore showing bearish oil price movement.
Oil Trading Down oil trend lines gain more validity each time crude oil price touches the downwards oil trend line but doesn't penetrate the oil trend line. A oil trading down oil trend remains the general direction until this series of lower highs and lower lows is broken.
In oil trading analysis, An upside penetration of a oil trading down oil trend line is a technical buy oil trading signal, and usually the first indication that the bearish direction of oil prices may soon reverse.
Downward Oil Trading Trend Line MT4 Oil Trading Trend Lines Indicator
When it comes to learning how to draw & learning crude oil trading analysis of oil charts, you need to know that when the crude oil market is bearish it forms lower lows & lower highs forming a downward general market direction. These are the points that are used to plot the downward oil trend line.
To draw this downward oil trend setup we use resistances and to do it correctly two resistances are needed. When crude oil price touches this oil trend line, then we sell and place stop loss just a few pips above the sloping resistances:
Trading This Downward Oil Trading Trend Market Move
When trading with this oil trend line trading method, this oil trend line setup will show the general direction of the market as downward therefore oil traders will only open short sell crude oil trades. These are the levels where if crude oil price retraces then these points will provide strong resistance. This is why many short sellers will wait until crude oil price retraces upward and hits these retracements levels to open sell crude oil trades. Oil trades opened at these levels have a high Risk to Reward Ratio with minimum draw down.
For Example, in the above oil trading example, a trader would have opened short sell oil trading signals at the resistance1, resistance2, resistance3 and these sell crude oil trades would have made a lot of trading profits with minimum amount of drawdown/retracement.
Downwards Oil Channel MT4 Channel Indicator
A oil downward channel is plotted by drawing a line that is parallel to the downward oil trend line & then adjusting it to touch the bottoms boundary of the crude oil price movement. This then forms a downwards oil channel & as long as the crude oil price stays between these 2 channels the general oil market direction is intact the crude oil market direction will continue being bearish.
Trading The Downwards Crude Oil Trading Channel
The downward oil channel is used by crude oil traders to show levels where it is best to take profits. Oil traders will take some profit once the crude oil price touches the lower channel & wait for another retracement before opening a short sell oil trading again.
MT4 Tools For Drawing Crude Oil Trading Channels
The oil trading tools to draw these oil channels studies on the MT4 crude oil charts are found on the Lines Toolbar within the MT4 crude oil trading platform, to access this MetaTrader 4 tool bar if it is not activated on your MT4 Oil Platform, Click in 'View' Next to 'File' at the top left corner of the MT4 Crude Oil Trading Software & click View, Then Click on Tool Bars, Then Check the Lines Toolbar by clicking on it.
Below is the screenshot of these MT4 tools: just click on this MetaTrader 4 channels drawing tool and select the point to where you want to place this oil channels tool on the crude oil chart.
MetaTrader 4 Technical Analysis Charts - Downwards Oil Trading Channels
MT4 Toolbar - MT4 Tools for Drawing Oil Trading Trend Lines & Oil Trading Channels used to obtain these oil trend line drawing tools is shown above, to draw these oil trend line setups or oil channels, just select the above MT4 oil trend line drawing tools shown on the MT4 software and select the two points where you want to draw the downward oil trend line.
This oil trend line oil trading strategy is one of the simplest and popular oil technical indicators used by crude oil traders to analyze the crude oil market trend direction.
