Add Oil Trading Trend Line on Crude Oil Trading Chart

Sometimes support & resistances are formed diagonally in a similar way like a staircase. This forms a oil trend which is a sustained movement in one direction either upward or downward.

A oil trend line depicts the points of support & resistance for the oil price, depending on the direction of the market. For an upward moving market it will shows the points of support and for a downward moving market it will show the areas of resistance and they are mainly used by many investors to determine these resistance and support levels.

Oil Trading Trendline is a straight line that connects 2 or more crude oil trading price points and then extends into the future to act as zones of support or resistance. There are two different types: upward and downward. It is an aspect of crude oil trading analysis that uses line studies to try and predict where the next move will head to. A trader must know how to draw and interpret signals generated by this tool.

The basis of this analysis is based upon the idea that markets move in trends. They are used to show three things.

• The general direction - up or down.
• The strength of the current move - and
• Where future support & resistance will be likely located

If lines forms in a certain direction then market usually moves in that direction for a period of time until a time when it is broken.

Plotting these on a oil chart shows the general oil trend of the crude oil market which can either be upwards or downward.

Below is example of how to plot these on charts

Tutorial: How to Draw & Trade Upward Move

Course: How to Draw & Trade Downwards Move

The MT4 software provides charting tools for drawing these on oil charts. To draw them onto a crude oil chart, investors can use the tool provided on the MT4 software that is shown below.

To draw on this on a oil chart just click the drawing tool above on the MT4 technical analysis software and select point A where you want to start drawing and then point B where you want the it to touch. You can also right click on the trend-line and on properties option select the option to extend its ray by checking the "ray check box", if you don't want to extend it, then uncheck this option in your oil platform. You can also change other properties such as color & width on this property popup panel of the properties. You can download MT4 software & learn technical analysis with it.

The oil trend is your friend. Is a popular saying among traders because you should never go against it. This is most reliable method to trade Oil Trading because once oil prices begin to move in one direction they can continue to move in that particular direction for quite some time - therefore using this method presents opportunity to make profits from the oil market.

Principles of How to Draw

1. Use candle oil charts

2. The points used to draw are along the lows of the crude oil price bars in a rising market. An upwards bullish move is defined by higher highs & higher lows.
3. The points used to draw are along the highs of the crude oil price bars in a downward falling market. A downward bullish move is defined by lower highs and lower lows.
4. The points used to draw are extremes points - the high or the low oil price. These extremes are important because a close beyond the extreme tells investors the oil trend of the oil trading instrument might be changing. This is an entry or an exit signal.
5. The more often a trend-line is hit but not broken, the more powerful its signal.

There are 2 main ways of trading this oil trading setup:

1. The Bounce
2. The Break

Technical Analysis Methods

The bounce is a continuation signal where crude oil price bounces off this line to continue moving in the same direction. In a downward move, the crude oil market will bounce downwards after hitting this level which is the resistance level. In an upward move, the crude oil market will bounce upwards after hitting this level which is the support level.

The break is a reversal oil signal where the crude oil market goes through the line and starts moving in the opposite direction. When an up oil trend is broken then the sentiment of the crude oil market reverses and becomes bearish and when a down oil trend is broken then the sentiment reverses and becomes bullish.

For very strong trends, after this break signal, the crude oil price will consolidate for some time before moving in the opposite direction. For short term trends then this break signal will mean crude oil price may reverse immediately.

In oil analysis, both the bounce & the breaks-out which are used in technical analysis charts are based upon these levels being support and resistance.

Entry, Exit and Setting stops:

This method used to determine good entry and exit points, protective stops are placed just below them. The bounce is a low-risk entry method used by crude oil traders to place entry trades after crude oil price has retraced. Trades are setup along these levels & a stop loss placed just above or below.

The oil trend-line break is a crucial technical indicator of possible Oil Trading reversal. When a the its broken the crude oil price starts move in the opposite direction. This provides an early exit signal for investors to exit their open trades and take profits. When there a penetration of these levels, it is a signal that the crude oil price can start moving in opposite direction.

Unlike other technical analysis indicators there is no formula used to calculate it, this pattern is just drawn between 2 chart points.