Hi Traders! Oil technical analysis and short term forecast post is here. We do our analysis on the MetaTrader4 platform (MT4), some very interesting, useful tips and hacks about the MT4 platform could be found here. As we do in every technical analysis post we are going to perform the multi-timeframe technical analysis on Oil in order to find possible trading opportunities. If you would like to learn more about the way we trade and the technical analysis we use then check out theTraders Academy Club Spoiler alert – free memberships are available! Let’s start our analysis now from the highest timeframe which will be the H4 chart here.
Oil H4(4 Hours) Chart Analysis – Strong Resistance Zone, Bearish Hidden Divergence, ADX Indicator
On the H4 chart, we have a strong resistance zone that has formed and the price which is moving higher has reached this zone, respected it and is bouncing lower from this zone. In addition to this, the price has created a bearish hidden divergence between the first high that has formed at 109.419 and the second high that has formed at 102.707 based on the MACD indicator, which we may consider as evidence of bearish pressure. Also, the ADX indicator gave a bearish signal here at the cross of -DI (red line) versus +DI (green line) and the main signal line (silver line) reads value over 25 which we may consider as yet another evidence of bearish pressure. So everything looks good here for the bears and we may now move down to lower timeframe and look for evidences supporting this short term bearish view.
Oil H1(1 Hour) Chart Analysis – Bearish Convergence, ADX Indicator
On the H1 chart, we could see that the price which was moving higher has created a bearish divergence between the first high that has formed at 101.813 and the second high that has formed at 102.707 based on the MACD indicator. The price then moved lower and broke below the last low at 99.134 creating lower lows, thus forming a classical setup of bearish divergence followed by bearish convergence, we may consider these as evidences of bearish pressure. Generally, after a bearish convergence we may look for corrections and then further continuation lower. Currently, it looks like a correction has happened. In addition to this, 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 which we may consider as yet another evidence of bearish pressure. Until the strong resistance zone (marked in red) holds my short term view remains bearish here and I expect the price to move lower further.
Technical Analysis & Forecast Summary
Oil H4(4 Hours) Chart Analysis
- Strong Resistance Zone, Bearish Hidden Divergence, ADX Indicator
Oil H1(1 Hour) Chart Analysis
- Bearish Convergence, 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 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.
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Happy Trading!
Arvinth Akash
Traders Academy Club Team.
