Hi Traders! Oil forecast and technical analysis is here. The way I would like to analyze the chart for setups is based on multi-timeframe confirmations because in my POV if we get more evidences on different timeframes for the same direction then it makes the setup much more reliable. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club Spoiler alert – free memberships are available! Let’s start our analysis from the highest timeframe which will be the weekly chart here.
You can watch the video explanation of this idea here
On the weekly chart the price which is moving higher has reached a key resistance zone formed by the 100%(71.437) Fibonacci expansion level of the first wave and the 61.8%(78.037) Fibonacci expansion level of the second wave. In addition to this we have a potential bearish divergence that is forming between the first high that has formed at 67.830 and the second high that has formed at 74.188 based on the MACD indicator. Also, based on the Stochastic Oscillator we could see that the price has reached its extreme, we may consider these as evidence of bearish pressure. We may now move down to lower timeframe and see if we can find evidences supporting this bearish view.
On the H4 chart, we have a bearish divergence that has formed between the first high that has formed at 74.105 and the second high that has formed at 74.188 based on the MACD indicator. The price then moved lower and broke below the last low at 72.217 thus forming a classical setup of bearish divergence followed by bearish convergence, we may consider this as evidence of bearish pressure. As per the book scenario after a bearish convergence we may expect corrections and then further continuation lower. In addition to this, the ADX indicator gave a bearish signal at the cross of -DI (red line) versus +DI (green line), and the main signal line (silver line) reads value over 25, we may consider this as another evidence of bearish pressure. Also, based on the Parabolic Sar we could see that the dots are above the price which we may consider as yet another evidence of bearish pressure. We may now move down to one timeframe lower and see if we can find evidences supporting this bearish view.
On the H1 chart, the price which is moving lower has created a bearish trend pattern in the form of three lower highs, lower lows which we may consider as evidence of bearish pressure. Generally, after a bearish trend pattern, we may expect corrections and then further continuation lower. Also, the ADX indicator gave a bearish signal here as well at the cross of -DI (red line) versus +DI (green line), and the main signal line (silver line) reads value over 25, we may consider this as yet another evidence of bearish pressure. Until the strong resistance zone (marked in blue) shown in the image below holds my view remains bearish here and I expect the price to move lower further.
Oil W1(Weekly) Chart Analysis
Oil H4(4 Hours) Chart Analysis
Oil H1(1 Hour) Chart Analysis
It is always recommended to look for confirmations before you jump into any trade. If you are not sure about how to trade this sell setup then you can use any setup and strategy that you have in your arsenal to look for bearish moves and join this sell trade.
Also, don’t forget to protect your sell trade using a stop loss and make sure to set a target and keep a proper risk/reward ratio.
You will also find a pretty extensive database of educational materials here in the blog – just use the search or check out the Forex Education section above.
Not sure how to enter a trade? Spot reversals (bounces)? Not sure how to spot breakouts?
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If you have any further questions, don’t hesitate to drop a comment below!
To your success,
Vladimir Ribakov
Certified Financial Technician
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