Putting short-term and long-term charts in perspective
Did you ever encounter different views on a different time-frames? Showing you a different picture. What to choose for trading? What strategy? That is where your sense of trend direction kicks in. What do we have looking at the Oil charts now?
Looking at the monthly chart above we can see that the instrument has broken above the strong horizontal upside resistance 67.30 level and above the long-term falling trendline 60 level. This break and a monthly confirmation are significant.
For some traders which are not using the top-down trading analysis, the problem is arising when they look at the weekly chart and they are intrigued by the latest drop off the channel top 77 level. Some see this as a bottom for an uptrend continuation. The pair is still above the 100 and 200 SMA’s on a Weekly timeframe. This bounce could be used for a swing trading with a good risk to reward. Target should be in the79-80 zone and the risk to reward for this kind of longs is excellent.
A Daily chart is revealing the 66 level uptrend line support and traders should be looking for the long trades from here. Your stops should be below the 66 level. This will be then a long trade with the 1-2$ of the risk comparing to 7-8$ reward per contract which is excellent for trading.
The main conclusion of this technical analysis insight is that in the medium-term Oil will have a higher probability to swing higher and the invalidation of this swing higher will come only on a daily close below the 66 level.
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