Crude oil price forecast are made using an array of statistical, technical analysis tools, and technical trading indicators. A sound and thorough crude oil price forecast will help traders define key support and resistance, market direction, and potential turning points so that they gain an edge in timing trades and managing trade risk. Traders use the very advanced charting packages such as Bloomberg, CQG, TradeStation, NinjaTrader, eSignal, and MultiCharts that come with an array of technical analysis tools and indicators such as momentum oscillators, candlesticks, and Fibonacci drawing tools to help identify price trends.
Key Tools of Price Forecasting Using Technical Analysis
Technical analysts use many types of tools to analyze crude oil prices identify trends, and spot potential trading opportunities. This article will explore some of the typical technical tools and indicators used by Kase and Company, Inc. for crude oil future price forecasts.
Charts play a key role in technical price forecasting. They help identify trends, looking for chart patterns, and identifying key waves, retracements, and swing points. A technical analyst uses charts to look for potential trading opportunities. There are many types of charts such as time, volume, or range based. Each has its own usefulness to a technical analyst. There are also different ways to plot the data on the screen, such as open-high-low-close (OHLC) charts, close-only or line-on-close charts, candlestick charts, and point and figure charts.
Geometric Formations are derived from patterns that form on charts such as double bottoms and tops, flag, pennants, head and shoulders, and many others. There are three types of chart patterns: continuation, reversal, and breakout.
Continuation patterns such as flags and pennants show an analyst when a correction is taking place during a trend and points at which the trend will most likely continue.
Reversal patterns, such as double tops and bottom and head and shoulder formations tell an analyst when the market is reversing direction.
Breakout patterns such as coils indicate the market is neutral, but has price points at which the market will determine a longer term direction if broken.
Technical Indicators are very effective in crude oil future price forecasts. Technical Indicators plot a series of data normally based on underlying price and/or volume data. Traders use these indicators and some additional information to make educated trading moves and decisions. Technical trading indicators such as RSI, Moving Averages and MACDs are useful for providing signals for:
Trend – The present predisposition to which prices are trading (bullish/bearish/sideways).
Momentum – The strength of the present trend.
Reversals – When a trend ends and a move in the opposite direction takes place
Divergences – When the price of a financial market and an indicator diverge in trend i.e. move in opposing directions.
Kase StatWare is an advanced and user friendly technical analysis trading indicator package developed by acclaimed market technician Cynthia A. Kase, CMT, MFTA. StatWare’s self-optimizing indicators; stops are automatically set to optimally balance, allowing profits to run along with cutting the losses. The system is auto optimized for range, volatility, and risk that does away with the need for frequent change of settings. Moreover, the color coded KEES dots makes discerning trend and entry signal strength a breeze. The signals strictly follow rigorous statistical and mathematical principles, so are probability driven.
To conclude there are many ways to use technical indicators in crude oil price forecasts. If used intelligently, technical indicators can be useful to make better and more educated trading decisions.