Commodity Pattern Analysis

Commodity Pattern Analysis

By
www.CandlestickForums.com

In order to succeed in commodity
trading traders learn both fundamental
and technical analysis.


Fundamental commodity analysis tells
the trader about long term price trends
and commodity supply and demand.


Commodity fundamentals change with
time taking the commodity price with
them.


As prices change over time they move in
patterns.


It is commodity pattern analysis that is
the basis of technical analysis in
commodity trading.


Commodity pattern analysis goes back
centuries to the recognition of
Candlestick patterns.


These are price movement patterns that
predict subsequent price changes.


Traders reading Candlestick pattern
formations can anticipate and profit
from price movement in commodity
futures trading.


A new trader taking Commodity and
Futures training can learn both the
basics of how commodities are traded
and more advanced trading tactics.


Candlestick patterns such as the bullish
engulfing pattern give traders a heads
up for market reversal while other
patterns signal general market trends.


Commodity price patterns can be both
long and short term.


Agricultural commodities typically have
an annual pattern based upon an annual
harvest.


Even though a commodity such as corn
can be stored there is a cost to storage.
Thus corn will be cheaper after the
harvest and more expensive as the year
progresses.


This applies to corn futures as well when
traders anticipate corn pricing and trade
futures accordingly.


Very long term patterns can also develop
in agricultural commodities associated
with the eleven year solar cycle with its
effect upon weather patterns.


Commodity pattern analysis over an
eleven year term will note a rise and fall
in prices associated with rain
fall, production, and grain futures.


Commodity pattern analysis is most
pertinent to short term and day trading
of commodity futures.


Although all traders have access to the
same information there will be
variations in interpretation.


Traders will interpret the fundamentals
differently and they will interpret the
actions of other traders differently.


That is, their fundamental analysis and
technical analysis will vary.


There is no set commodity price but
moving commodity prices based upon
the actions of thousands of traders.


Using Candlestick analysis a trader is
able to anticipate price movement in
this moving market with a high degree
of reliability.


By accurate price anticipation the trader
using Candlestick basics and Candlestick
trading tactics can commonly make
successful trades in everything from gold
futures to oil futures.


Commodity pattern analysis is not just
applied to trading futures in
commodities but to options trading
commodity futures as well.


Buying calls on commodity futures gives
the trader the right to buy a futures
contract on or before the contract
expiration date and buying puts confers
the right to sell futures within the time
frame of the contract.


In neither case is there an obligation to
buy or sell. Thus the options trader pays
a premium to gain the opportunity for
profit but limits his loss to the amount of
the premium paid.


On the other hand selling calls and
selling puts confers the obligation to buy
or sell.


The trader in commodity futures options
will also use tools like Candlestick chart
formations to anticipate price
movement and profit.


Commodity Pattern Analysis

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