Hi Traders! Today I am sharing with you the Oil short term forecast and technical analysis post. In Oil, based on the multi-timeframe analysis method, we are going to look for the evidences on three timeframes that is on the current trading timeframe and two timeframes higher, when we get evidences that support our view on these three timeframes this makes the setup very reliable.We do our analysis on the MetaTrader4 platform (MT4). Some very interesting useful tips and hacks about the MT4 platform could be found here. 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 now from the highest timeframe which will be the daily chart here.
Oil D1(Daily) Chart Analysis – Higher Highs, Stochastic Oscillator
On the daily chart, we have a bullish rally and currently it looks like a correction is happening in the form of double wave down, once this correction completes itself we may then expect this bullish rally to continue itself. Also, we could see that the price which is moving higher has created higher highs based on the MACD indicator, which is a sign of gaining momentum towards the bullish side. In addition to this, based on the Stochastic Oscillator we could see that the price has reached its extreme which we may consider as yet another evidence of bullish pressure. So everything looks good here for the bulls and we may now move down to lower timeframe and look for evidences supporting this short term bullish view.
Oil H4(4 Hours) Chart Analysis – Key Support Zone, Bullish Divergence
On the H4 chart, currently it looks like a correction is happening in the form of double wave down. Also, the price which was moving lower reached a key support zone that has formed based on the 61.8%(95.036) Fibonacci expansion level of the big wave of this correction and the 61.8%(92.663) Fibonacci expansion level of the small wave of this correction. The price respected this key support zone and is currently bouncing higher from this zone. In addition to this, we could see that the price which was moving lower created a bullish divergence that has formed between the first low that has formed at 96.890 and the second low that has formed at 92.626 based on the MACD indicator which we may consider as evidence of bullish pressure. So the bottom line here is that the H4 chart has evidences supporting this bullish view. We may now move down to one more timeframe lower and look for evidences supporting this short term bullish view.
Oil H1(1 Hour) Chart Analysis – Bullish Divergence, ADX Indicator
On the H1 chart too we have a bullish divergence that has formed between the first low that has formed at 95.234 and the second low that has formed at 92.626 based on the MACD indicator which we may consider as evidence of bullish pressure. In addition to this, the ADX indicator gave a bullish signal here at the cross of +DI (green line) versus -DI (red line) and the main signal line (silver line) reads value over 25, we may consider this as yet another evidence of bullish pressure. Until the key support zone (marked in blue) shown in the image below holds my short term view here is bullish. If we get a valid breakout above the high at 98.153 we may then consider it as a validation for the bullish view and may expect the price to move higher further in the short term.
Technical Analysis & Forecast Summary
Oil D1(Daily) Chart Analysis
- Higher Highs, Stochastic Oscillator
Oil H4(4 Hours) Chart Analysis
- Key Support Zone, Bullish Divergence
Oil H1(1 Hour) Chart Analysis
- Bullish Divergence, ADX Indicator
Trading Tips
It is always recommended to look for confirmations before you jump into any trade. If you are not sure about how to trade this short term buy setup then you can use any setup and strategy that you have in your arsenal to look for bullish moves and join this buy trade.
Also, don’t forget to protect your buy trade using a stop loss and make sure to set a target and keep a proper risk/reward ratio.
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Happy Trading!
Arvinth Akash
Traders Academy Club Team
