Oil Trading Technical Analysis is Based on 3 Factors Common in the Oil Trading Market:
1. Oil Price Moves in Trends
Trading crude oil price movements follow trends. This means that after a oil trend has been established, the future crude oil price movement is more likely to be in same direction as the oil trend than to be against it. Most oil trading strategies are based on this crude oil trading analysis concept - oil trend trading.
2. Oil Trading Price Movement Discounts Everything
Crude oil trading analysis only considers crude oil price movement and assumes that, at any given time, crude oil price reflects everything that has or could affect the oil instrument including even the fundamental factors. This only leaves the study of crude oil price, which is a product of the supply and demand for oil in the oil market.
3. History Tends to Repeat Itself
History repeats itself mainly in terms of crude oil price movement. The repetitive nature of oil market movements is attributed to oil traders investor psychology; in other words, oil trading participants tend to provide a consistent reaction to the crude oil market most of the time. Crude oil trading analysis uses oil chart patterns to analyze these crude oil price movements. Although these oil charts represent historical data they are still relevant because they illustrate crude oil chart patterns that often repeat themselves.
Understanding this crude oil trading analysis of the crude oil market can be a valuable oil trading tool in determining the oil trend of any oil market and assisting with entry and exit levels for your crude oil trades.
The goal of these crude oil trading analysis methods is to help oil traders determine when the crude oil market is trending, & when it isn't. If the oil price is moving in one particular direction, then we want to be on board. If the oil instrument is not moving in a particular direction, all you are going to do is lose money as you will get whipsawed around and this is not what we want as oil trading investors.
Unfortunately, many oil traders fight the oil trend and buy or sell in the opposite direction of a this oil trend direction, trying to pick a top or a oil market bottom, only to see the crude oil market move further in the direction of the oil trend.
Another common mistake oil traders often make is adding onto a losing oil trading position, averaging a loss. This is not a good oil trading strategy especially in a strongly trending crude oil market. It is something that experienced investors never do. The oil trend is your friend, never go against it.
This crude oil trading analysis studies alert investors of oil trading setups & there are no certainties in financial crude oil market. Profits come from using proven oil trading strategies & oil trading methods to find a trending oil market and taking crude oil trades in the same direction of the crude oil trend.
With so many oil trading investors using similar oil trading tools, crude oil trading analysis can become a self fulfilling prophecy. If many oil trading investors use the same levels as a buying point, the crude oil price goes up as everyone will make similar crude oil trading analysis moves. However, the question is always how long these oil trading moves will last?
Understanding this crude oil trading analysis methods will give the oil charts some meaning when you look at them and apply crude oil trading analysis. Crude oil trading analysis will help you understand why certain crude oil price movements occurred.
Crude oil charts are used with oil technical indicators to look for crude oil chart patterns that have occurred in past under certain conditions. When these conditions are noted again, you can use the past crude oil chart patterns studies to make a buy or sell decision.
Some of the most common oil technical indicators include: Oil Trading Technical Analysis Explained
- Moving Averages Indicator
- Relative Strength Index Indicator
- Stochastic Oscillator Indicator
- MACD Technical Indicator
- Oil Trading Fibonacci Retracement Indicator
- Bollinger Bands Technical Indicator
Most oil technical indicators are shown separately from the oil chart usually below it. This is because these indicators often use a different scale than that of the crude oil price chart.
Some of the technical indicators are shown on the crude oil price chart itself, such as Moving Averages and Bollinger bands - these indicators are referred to as crude oil price overlays.
Explanation of these indicators is found under the tutorial: List of All Oil Indicators - Oil Trading Technical Analysis Course
SUMMARY
- Oil Trading Technical Analysis Relies on Defining Probabilities
- Oil Trading Technical Analysis Uses History of Oil Trading Price Patterns
- Oil Trading Technical Analysis Uses Several Analytical Tools (Oil Trading Indicators)
- Oil Trading Technical Analysis Uses Crude Oil Trading Chart Patterns
How to Trade Oil Trading With Oil Trading Technical Analysis Course
Most oil traders prefer technical analysis - learning the crude oil trading analysis methods also takes time to learn due to its nature which involves abiding by the crude oil trading technical rules.
To learn how to trade oil trading successfully, it's important that you understand the Three strategies, outlined below:
1. Oil Trading price moves will always follow a oil trend which can be identified by looking at the crude oil chart patterns or the candlesticks oil charts. If any oil trading investor tells you that you can also profit from the counter-trends consistently it will not be possible because the oil trend is the only proven method of making money in the oil market.
2. The market forces will drive the oil prices up or down depending on supply and demand. Crude oil trading analysis seeks to measure the demand supply of a oil instrument using various crude oil trading analysis tools and crude oil indicators. The demand supply is reflected in the crude oil price action. Therefore, by simply looking at the crude oil price movements themselves you can try and predict what direction the crude oil price is likely to move towards using one or two oil technical indicators - crude oil trading analysis indicators like the moving average or support and resistance levels oil indicators.
3. The oil market not only shows the history of the past oil prices, but will also follow the oil trend that was in place, until its oil trend direction reverses. Some very important oil indicators used to determine these oil market movements are Moving Averages, MACD and Bollinger Bands Oil Indicators.
When crude oil price starts to consolidate, which means there is no oil trend, you should use a different approach to analyze the crude oil market. You should use support and resistance levels and breakout oil trading strategies to analyze the ranging oil market oil prices.
When the crude oil market retraces, you should use crude oil patterns and oil technical indicators to analyze whether the current oil trend will continue or reverse.
