Momentum Energies Trends

What is a Momentum Trend?

A momentum energies trend is one that has more momentum than the earlier one, it can be plotted using a much steeper energies trend line than the one that was in place before. When a new line forms that is more steeper than a previous one we say that the trend has gathered extra strength and becomes much stronger. These types of trading set-ups requires a different type of market technical analysis.

In the example illustrated and explained below: Also when price is moving upwards within a trading channel, if price breaks the up channel a stronger energies trend is initiated as illustrated in the illustration below. If as a trader your chart breaks an up energies trendline to the upside in an upward direction moving market like the one below, Do not Try to Sell, Buy More Contracts, Remember this energies trading tip it can make you a lot of money just like the way it did in the trading analysis below.

Channel Break Upwards - More Momentum on Upward Market Movement

Using the same analysis example above we can also see how new steeper trendlines were shaped showing the trend was gathering momentum.

This is illustrated by the steeper trend lines which can be depicted as the price progresses.

The newly initiated energies trend has more momentum than the earlier one as shown by the formation of the steeper trend line.

This forms energies trend B & C as shown in the diagram below depicted using the MT4 technical analysis software, The momentum added a new steeper line as plotted on this chart.

This is illustrated in the example illustrated and explained below by the three lines A, B and C showing formation of stronger trends as the market continues to gather strength.

Price Gaining More Strength

However, when the steepest energies trend line is broken then even all the others trendlines will most likely also be broken too. It is best to take profit once the steep most trend-line is broken.

This technique can also be used by short-term energies traders like the day trader or the scalper, this pattern will oftenly form on the 5 minute & 15 minute chart. This parabolic trend lines can be used to know where to take profit. A trader should immediately book his profit as soon as the steepest trendline is broken.

How to Trade These

The momentum energies trend lines are good technical analysis tools for determining where to take profit early before other traders. This momentum trading setup occurs frequently on 1 minute, 5 minute and 15 minutes charts and therefore suitable for scalpers and day traders. For day trading which is most common? - the best chart to use is the 15 minutes sometimes the 5 minutes, For example after entering a short term trade either buy/sell and the market moves some pips in your favor & you spot this setup then it is best to exit once the steep most trend line is broken & take profit at that point.

Analysis Example

For this example we shall use short term chart of minutes for plotting, when the set-up appeared as below, it was a good point to take profit.

Trading The Momentum Market Moves

In the above example a trader trading long would have waited until the steep most trend line was broken then closed the trade and taking profit at this place thus making a profit of 42 pips on this buy trade. The trader would have exited the trade at the best time and thus avoiding the ranging energies trading market that followed.

Parabolic Trends

Sometimes a market moves in a parabolic manner, & this is seen when panic buying sets in and energies prices is driven vertical. During a parabolic up move, there is almost a complete absence of bears, which initiates a vacuum of buying. When this occurs traders scramble to just get into the market regardless of energies price, in the fear of being left behind. This can make the biggest energies price movements in the shortest amount of time, traders will set buy trade orders in this energies setup.

For this type of move it is best to keep opening buy - no need for analysis just keep opening buy.

This energies trend will last for even months on end even up to two years, for this time just keep opening buy and as long as those week and monthly trend lines are holding just keep opening buy and buying.

When a energies instrument moves in this manner, the highest point which is reached often symbolizes end of a move with energies prices not going back to the ultimate highs again for a very long time. When this point is reached & the most steepest energies trendline is broken it's best to consider that as a energies trend market reversal & it is best to take time out off the market and enjoy your profits for a while before calculating what's your next move.

The same can also happen for a down trend when there is panic selling and energies price is also driven vertical. This especially happens during recession.

The steeper a energies trend line angle, the less dependable it becomes. When the most steep is broken its best to exit this trade transaction. The example illustrated and explained below is for crude oil that has shaped a parabolic setup. Another example is energies that formed on the weekly/monthly chart during the period shortly after the steepest line in the crude oil chart was broken.

As a trader if you happen-to come across a parabolic energies trend in an upward trend just keep opening buy and buying some more and you'll more likely to make profits trading this market trend direction, there will be no added analysis requirement just the trend lines. The one thing to remember is to exit once the steep most line is over because the reversal on this energies pattern is very quick you need to also be very fast. Just make sure that you get out at the correct spot just like in the above example.

For example, the above parabolic movement is of crude oil chart, the traders had dominated to drive the price of oil from $70 to $150 over a period of a couple of months and at the top of the market those who call themselves market analysts were so bullish they predicted the price of oil would get to a high of $200, what these analysts did not know this concept a.k.a Vacuum buying, in analysis trading as long as the trend lines held the direction of the market was up, but even after the first steep most trend line was broken the analysts kept insisting the price would hit $200, guess what, after the most steepest trend line was broken it didn't even take 2 weeks to take the price of oil, back to $50 at sometime it was even $35. That is parabolic analysis, now-you-knownow-you're-informed.

Good examples of this energies pattern on charts is the weekly & monthly price charts for Energies Trading and Crude Oil, these charts can be found on MT4 trading platform depending on your online broker.