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