What is Oil Trading Technical Analysis?

Oil Trading Technical Analysis Strategies

Oil Trading Technical Analysis is the science and art of forecasting future crude oil price movement based on historical oil prices combined with Oil Trading technical indicators. Oil Trading Technical Analysis Course - This Oil Trading Technical Analysis study often interprets the crude oil price data by studying a oil chart and looks for crude oil patterns and oil signals for buying and selling.

The history & origin of this Oil Trading Technical Analysis method dates back several hundred years to Japanese & Arabian markets, Oil Trading Technical Analysis involves using math manipulation of crude oil price data to optimize buy & sell points. The use of this type of Oil Trading Technical Analysis in modern computerized programs has become increasingly popular.

The information which the is studied and assessed is crude oil price movement so as to plan an entry or exit into a oil trade. The goal is to determine how the crude oil market is trending.

What Does It Really Measure?

This Oil Technical Analysis - studies the supply and demand of oil in an attempt to determine in what direction the crude oil price will continue to move in.

While crude oil trading analysis deals with crude oil price and oil indicators it is just a measure of investor sentiment.

What to Look For

Find the Crude Oil Trading Trend

The motto of crude oil trading analysis is: "the oil trend is your friend." Finding the prevailing oil trend will help you become aware of the overall direction and offer you better oil trading opportunities - especially when shorter term crude oil market movements give conflicting trading signals.

Daily crude oil charts are more ideally suited for identifying long-term oil trends. Once you've found the overall trend direction then you generally open buy or sell crude oil orders in that direction.

Oil Trading Trend or Range

No matter what crude oil price is doing, it usually falls into one of those two categories. If the crude oil price is moving in a pattern or in one direction, you can use oil trend lines to analyze where the crude oil price should go. If the crude oil market seems to be bouncing back and forth in a range, you can use support and resistance lines to make note of where to open buy or sell oil trading orders.

One of the greatest goals of Oil Trading Technical Analysis studies & techniques in the crude oil market is to determine whether a given oil will move in a oil trend in a certain direction, or if crude oil market will continue moving sideways and remain range-bound. The most common Oil Trading Technical Analysis method to determine this is to draw oil trend lines which are used by crude oil traders to determine whether or not the current direction of the market will continue. Many investors avoid trading in a range-bound oil market and only buy or sell oil when there is a oil trend since this makes trading more predictable.

For crude oil trading technical analysts the most important oil trading tool is the crude oil chart. The purpose of a oil chart is to provide a visual representation of oil trading price quotes (drawn on the y-axis) against time (drawn on the x-axis) for oil, this oil chart is used as a basis for making predictions of the future crude oil price direction.

Crude Oil Trading Trend-lines

The direction of these oil trend lines determines the crude oil market direction. A oil trend line drawn moving upward represents a bullish market and a oil trend line drawn moving downward represents a bearish market.

Support & Resistance - Oil Trading Analysis

Support & resistance levels are points on a oil chart that tend to act as boundaries. A support zone is usually the trough or low point on a oil chart whereas a resistance level is the high or the peak point on a crude oil chart. These support and resistance levels are used as buy/sell points.

Moving Averages - Oil Trading Analysis

Moving averages oil indicator are used to show the average crude oil price over a given period of time. Moving Averages are called moving because they reflect the latest average in the movement of the oil prices.

Crude Oil Trading Strategies

To be a successful oil trader you need to come up with a oil trading strategy. There is not one set Oil Trading strategy that is good for all crude oil traders. But Rather, each oil trader needs to develop their own oil trading strategy.

Oil Trading Technical Analysis is the most widely used strategy in the crude oil market and is used to decide the entry and exit points.

Market movements have identifiable repeating crude oil price patterns that have been studied over many years providing a thorough understanding of these oil market trends and how they can be used to form the basis of a good oil trading strategy.

There are many Oil Trading Technical Analysis tools available provided to facilitate this study

The beginner trader is advised to study each Oil Trading Technical Analysis tool separately to get working knowledge of the concepts and application for each Oil Trading Technical Analysis study. Once you understand one Oil Trading Technical Analysis method, keep on using it while studying others. Each Oil Trading Technical Analysis tool tends to combine well when used with other Oil Trading Technical Analysis Tools.

Support and resistance levels are also used in many oil trading strategies. Support is defined as the level that is repeatedly seen as the bottom (floor) - when the crude oil price reaches this level it tends to bounce. Resistance level is the ceiling, the upper boundary (ceiling) that oil price rarely trades above.

Support and resistance levels are valid for a period of time, until they are broken, When the crude oil market breaks through these support and resistance levels, the crude oil price is expected to continue in that direction. For example, if the crude oil market rises above the previous resistance level, it is seen as a bullish oil signal and the bullish movement should continue upwards.

Longer oil chart timeframes establish more stronger support and resistance levels. Oil traders can use these support and resistance levels to determine when to enter a trade or exit an open position.

Moving averages is another common crude oil indicator used as to create oil trading strategies. Moving averages try to smooth out short term crude oil market price fluctuations giving a clearer picture of the crude oil price movements and trends. Oil Traders can draw SMA to determine crude oil price movement tendency to move up or down - oil trend.

If crude oil price crosses above the simple moving average then it will keep on moving up.

If crude oil price crosses below the SMA then it will keep moving down

These are examples of oil trading strategies that can be used individually or combined.

Oil Traders use two or more Oil Trading Technical Analysis studies to determine when to open an order when both Oil Trading Technical Analysis indicators that they are using support the same direction. If several Oil Trading Technical Analysis indicators show that the crude oil market is moving towards a particular direction the a trader can trade with more reassurance than when he is only relying on a single Oil Trading Technical Analysis indicator.

Fundamental analysis should also be used together to reinforce Oil Trading Technical Analysis findings, or vice versa. A trader should ideally take into account two or more Oil Trading Technical Analysis indicators when developing a Oil Trading Strategy.

Every oil trading strategy should provide clear guidelines about when to enter and exit a buy or sell oil trade position, how much loss can be accepted if the crude oil market moves in the other direction and how much profit is expected. Following these simple Oil Trading Technical Analysis guidelines can help you become successful in crude oil trading.