Hi Traders! Oil short term forecast update and follow up is here. On October 20th I shared this “Oil Technical Analysis And Short Term Forecast” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. 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!
My Idea
On the H4 chart, the price which was moving higher has created a bullish trend pattern in the form of three higher highs, higher lows, we may consider this as evidence of bullish pressure. Generally, after a bullish trend pattern, we may expect corrections and then potential continuation higher. Currently, it looks like a correction is happening. 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. Currently, it looks like a correction is happening. Also, we had two strong resistance zones that has formed and the price which was moving higher has broken above these zones and is holding above them. After the breakout these strong resistance zones are acting as two strong support zones for us. Until both these strong support zones shown in the image below holds my short term view remains bullish here and I expect the price to move higher further.
Oil H4(4 Hours) Chart Current Scenario
Based on the above-mentioned analysis my short term view was bullish here and I was expecting the price to move higher further until the two strong support zones hold. The price action followed my analysis here exactly as I expected it to. After the bullish trend pattern, we had a pullback with the price reaching the first strong support zone and it slowed down by creating a bullish divergence between the first low that has formed at 85.200 and the second low that has formed at 81.231 based on the MACD indicator. The price then moved higher and broke above the most recent downtrend line, we may consider these as facts provided by the market supporting the bullish view. We then had a pullback with the price reaching the first strong support zone again, respected it and then it bounced higher from this zone and delivered an extraordinary move to the upside, as you can see in the image below!
(Note: You can learn about a Killer Forex Strategy “Double Trend Line Principle” here)
As traders we always have two choices, the first one is to fall in love with our analysis and try to convince the market and expect the price to move in the direction as per our wish. The second one is to follow the facts that the market provides us and make the right actions according to that. As you know the first option won’t help us and as you can see in the example above what happened when we followed the facts that the market hinted to us and took the right action according to that.
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If you have any further questions, don’t hesitate to drop a comment below!
Happy Trading!
Arvinth Akash
Traders Academy Club Team.
