What is Commodities Technical Analysis?
Commodities Technical Analysis Strategies
Commodities Technical Analysis is the science and art of forecasting future commodities trading price movement based on historical commodities trading prices combined with Commodities technical indicators. Commodities Technical Analysis Course - This Commodities Technical Analysis study often interprets the commodities trading price data by studying a commodity chart and looks for commodity patterns & commodity signals for buying and selling.
The history & origin of this Commodities Technical Analysis technique dates back several hundred years to Japanese & Arabian markets, Commodities Technical Analysis involves using math manipulation of commodities trading price data to optimize buy & sell points. The use of this type of Commodities Technical Analysis in modern computerized trading programs has become increasingly popular.
The information which the is studied and assessed is commodities trading price movement so as to plan an entry or exit into a commodity trade. The goal is to determine how the commodities trading market is trending.
What Does It Really Measure?
This Commodities Technical Analysis - studies the supply and demand of a commodity instrument in an attempt to determine in what direction the commodities trading price will continue to move in.
While commodity technical analysis deals with commodities price and commodity indicators it is just a measure of investor sentiment.
What to Look For
Find the Commodity Trend
The motto of commodity technical analysis is: "the commodity trend is your friend." Finding the prevailing commodity trend will help you become aware of the overall direction and offer you better commodity trading opportunities - especially when shorter-term commodity market movements give conflicting signals.
Daily commodity charts are more ideally suited for identifying long-term commodity trends. Once you've found the overall direction then you generally open buy or sell orders in that direction.
Commodities Trend or Range
No matter what commodities trading price is doing, it usually falls into one of these two categories. If the commodities trading price is moving in a pattern or in one direction, you can use commodity trend lines to analyze where the commodities trading price should go. If the commodity 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 commodities trade orders.
One of the greatest goals of Commodities Technical Analysis studies & techniques in the commodities trading market is to determine whether a given commodity pair will move in a commodity trend in a certain direction, or if commodity market will move sideways and remain range-bound. The most common Commodities Technical Analysis method to determine this is to draw commodity trend lines which are used by commodities traders to determine whether or not the current direction of the market will continue. Many investors avoid trading in a range-bound commodity market & only buy or sell commodity when there is a commodity trend since this makes trading more predictable.
For commodity technical analysts the most important commodity tool is the commodities chart. The purpose of a commodity chart is to provide a visual representation of commodities trading price quotes (drawn on the y-axis) against time (drawn on the x-axis) for commodity instrument, this commodity chart is used as a basis for making predictions of the future commodities trading price direction.
Commodity Trendlines
The direction of these commodity trend lines determines the commodity market direction. A commodity trend line drawn moving upward represents a bullish market and a commodity trend line drawn moving downward represents a bearish market.
Support & Resistance
Support & resistance levels are points on a commodity chart that tend to act as boundaries. A support level is usually the trough or low point on a commodity chart whereas a resistance area is the high or the peak point on a commodity chart. These support and resistance areas are used as buy/sell points.
Moving Averages Commodity TradingTrading Technical Indicator
Moving averages commodity indicator are used to show the average commodities trading price of a commodity instrument over a given period of time. Moving Averages are called moving because they reflect the latest average in the movement of the commodities prices.
Strategy
To be a successful commodity trader you need to create a commodity strategy. There is not one set Commodity Trading strategy that is good for all commodities traders. But Rather, each commodity trader needs to develop their own commodities trading strategy.
Commodities Technical Analysis is the most widely used strategy in the commodity market and is used to decide the entry and exit points.
Market movements have identifiable repeating commodities trading price patterns that have been studied over many years providing a thorough understanding of these commodity market trends and how they can be used to form the basis of a good trading commodities trading strategy.
There are many Commodities Technical Analysis tools available provided to facilitate this study
The beginner commodity trader is advised to study each Commodities Technical Analysis tool separately to get working knowledge of the concepts and application for each Commodities Technical Analysis study. Once you understand one Commodities Technical Analysis method, keep on using it while studying others. Each Commodities Technical Analysis tool tends to combine well when used with other Commodities Technical Analysis Tools.
Support & resistance levels are also used in many commodities trading strategies. Support is defined as the level that is repeatedly seen as the bottom (floor) - when the commodities trading price reaches this level it tends to bounce. Resistance level is the ceiling, the upper boundary (ceiling) that a commodity instrument rarely trades above.
Support and resistance levels are valid for a period of time, until they are broken, When the commodity market breaks through these support and resistance levels, the commodities trading price is expected to continue in that direction. For example, if the commodity market rises above the previous resistance level, it is seen as a bullish commodity signal and the bullish movement should continue upwards.
Longer commodity chart time frames establish more stronger support and resistance levels. Commodities traders can use these support and resistance levels to determine when to enter a trade position or exit an open position.
Moving averages is another common commodities technical indicator used as to create commodities trading strategies. Moving averages try to smooth out short term commodity market price fluctuations giving a clearer picture of the commodities trading price movements and trends. Commodities Traders can draw SMA to determine commodities trading price movement tendency to move up or down - commodities trend.
If commodities trading price crosses above simple moving average then it will keep on heading upwards.
If commodities trading price crosses below the SMA then it will keep moving down
These are examples of commodity strategies that can be used individually or combined.
Commodities Traders use two or more Commodities Technical Analysis studies to determine when to open an order when both Commodities Technical Analysis indicators support the same direction. If several Commodities Technical Analysis indicators show that the commodity market is moving towards a particular direction the a trader can trade with more reassurance than when he is only relying on a single Commodities Technical Analysis indicator.
Fundamental analysis should also be used together to reinforce Commodities Technical Analysis findings, or vice versa. A trader should ideally take into account two or more Commodities Technical Analysis indicators when developing a Commodity Trading Strategy.
Every commodity strategy should provide clear guidelines about when to enter and exit a buy or sell commodity trade position, how much loss can be accepted if the commodity market moves in the other direction and how much profit is expected. Following these simple Commodities Technical Analysis guidelines can help you become successful in commodity.
