Crude Oil Trendline Break

After crude crude oil price has moved in a certain direction for an extended period of time within a channel it reaches a point where it stops moving within the channel. When this happens we say that the oil trend line has been broken.

Since the line is point of support or resistance then we expect the oil market to move towards the opposite direction. When this happens traders will close the oil orders which they had bought or sold. This is known as taking profit.

Up oil trend Reversal

When crude crude oil trading price breaks-out upward line (support) the oil market will then move down

This signal is considered to be complete with the formation of a lower high or a lower low. This also provides a trading opportunity to go short once it's broken.

Down oil trend Reversal

When crude crude oil trading price breaks-out downward line (resistance) the oil market will then move up

Downward Channel break

This signal is considered to be complete with the formation of a higher low or higher high. This also provides a trading opportunity to go long once it's broken.

NB: Sometimes when crude crude oil trading price breaks its oil trend it might first of all consolidate before moving in the opposite direction. Either way it is always good to take profit when the oil market direction reverses.

To trade this oil setup as a oil trader once you open a new trade in the direction of the oil trend reversal the crude crude oil price should immediately move in that direction, in a crude oil price breakout manner. This means that the oil market should immediately move in that direction without much of a resistance.

If on the other hand the oil market does not immediately move in the direction of the crude crude oil trading price breakout then it is best to close out the trade because it means that the oil trend is still holding.

Another tip is to wait for the oil trend line to be broken and for the oil market to close above or below it so as to confirm this oil signal.

What happens is that most traders open trades waiting for a reversal even before the oil trend is broken, only for the crude crude oil trading price to touch this line and for the current market direction to hold and the oil to continue with the current market direction.

Therefore, when trading this oil setup it is best to wait until the breakout has been confirmed by crude crude oil trading price closing above or below the oil trend line, depending on the direction of the crude oil market.

• Upward Market Direction Reversal - this oil signal is confirmed once the oil market closes below this upward line, this should be the correct time to open a sell short trade, so as to avoid a oil whipsaw.

• Downward Market Direction Reversal - this oil signal is confirmed once the oil market closes above the downward line, this should be the correct time to open a buy long trade, so as to avoid a oil whipsaw.

Combining With Double Tops or Double Bottoms Crude Oil Trading Chart Patterns

A good trade setup to combine this oil setup with is the double tops and double bottoms oil chart patterns. Read Double Tops and Double Bottoms Chart patterns Tutorial.

This setup should already have formed before the oil trend break signal. Because these double tops and double bottoms are also reversal oil signals, then combining these two setups will give the oil trader a good probability of avoiding a oil whipsaw.

In the above chart screenshots these oil setups can be confirmed to have formed even before the reversal crude oil trade signal popped up.

First Examples of Upwards Direction Reversal - the Double tops chart pattern had already formed before the oil trend break signal appeared on the crude oil chart.

Second Examples of Downwards Direction Reversal - the Double bottoms crude oil pattern had already formed before the oil trend break signal appeared on the crude oil chart.

Double Tops or Double Bottoms Combined With other Reversal Oil Trading Signals