Crude Oil Analysis and How to Trade Oil Reports
Trading oil is not an easy thing to do because oil has many factors that play into its price, including extreme weather conditions, geopolitical events, currency fluctuations, and more.
During any time of the day, oil traders and their oil analysis stand a good chance of having one of their charts messed up by one of these factors that directly affect the price of crude oil.
But, I am a firm believer that these factors (news events) generally fall in line with the overall larger trend of oil. Understanding how to spot trends in oil is a vital part of the equation.
Another important aspect of trading crude oil along with stocks and commodities is to understand how to trade price and volume at an intraday time frame. If you don't understand candlesticks, chart patterns and volume, you will get your head handed to you more times than not.
Let's take a look at some charts and my short video which cover everything you need to know in great detail.
How to Trade Oil, Daily Chart Analysis:
Below you can see clearly how the overall trend is down for oil. You can also see the repeated bearish patterns and key resistance levels. In my oil analysis, I focus on finding and trading the trend. You will not find me trying to pick a major top or bottom with my strategy; I focus on low-risk, high-probability continuation patterns within a trend.
Once the trend stops and reverses there will likely be one or two losing trades as the investment shakes things up and sentiment slowly comes around and shifts to support the new trend in oil.
Intraday Crude Oil Analysis:
This is a chart of Oct 19 using a 5-minute interval. The annotations on the chart explain clearly what I saw and was hoping to see for an oil ETF trade setup this week.
In short, I have been waiting for this setup to unfold for a few days now. This report goes to show that if you have the patience to sit back, watch, and wait, then you will trade with much less risk. By doing this you reduce risk on your overall position because you can time your entry one to three days before oil moves in your favor, getting you the best possible price. Additionally, the less time you have to keep your money in a trade, the better; this is because of the factors (news events) discussed earlier. Cash is king!
Editor's Note: Chris Vermeulen offers more content at his site, TheGoldAndOilGuy.com.
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