Different Type of Market Technical Analysis

What is a Momentum Trend?

A momentum trend is one which has more momentum than the earlier one, it can be plotted using a much steeper 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 more momentum & becomes much stronger. These types of set-ups requires a different type of market analysis.

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

Channel Break Upward - More Momentum on Upward Market Movement

Using 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 portrayed as the crude trading price progresses.

The newly shaped trend has more strength than the previous one as shown by the forming of the steeper trendline.

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

This is shown in the example shown below by the three lines A, B and C showing formation of stronger trends as the market continues to gain momentum.

Price Gathering More Momentum

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

This strategy can also be used by short term traders like the day trader or the scalper, this setup will frequently form on the 5 min and 15 minute chart. This parabolic trendlines 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 trend lines are good analysis tools for determining where to take profit early before the 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 mins, For example after entering a short term trade either buy/sell and the market moves some pips in your favor and you identify this pattern then it's best to exit once the steepest trendline is broken and take profit at that point.

Technical Analysis Example

For this example we shall use the short-term chart of minutes for plotting, when the pattern showed up as below, it was a good place 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 & taking profit at this place thus making profit of 42 pips on this buy oil trade. One would have exited the trade position at the best time and thus avoiding the choppy oil market that followed.

What is it?

Sometimes a market moves in a parabolic formation, and this is seen when panic buying sets in and crude trading prices is pushed 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 crude trading price, in the fear of being left behind. This can make the biggest crude trading price movements in the shortest amount of time, traders will set buy trade orders in this crude trading setup.

For this type of move it's best to keep buying - no need for technical analysis just keep buying.

This trend will last for months on end even up to 2 years, for this time just keep buying & as long as those weekly & monthly oil trend lines are holding just keep buying & buying.

When a oil moves in this way, the highest level that is attained often marks the end of a move with crude trading prices not returning to the ultimate peaks again for a very long time. When this point is reached & the most steepest trendline is broken it is best to consider that as a oil trend reversal and it's best to take time off the market & enjoy your trading profits for sometime before calculating what's your next move.

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

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

As a trader if you happen-to come across a parabolic oil trend in an upward direction just keep buying & 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 pattern is very quick you need to also be very fast. Just make sure you exit at the correct point just like in the above example.

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

Good examples of this oil setup on trading charts is the week & monthly crude trading price charts for Oil Trading and Oil, these charts can be found on MetaTrader 4 software depending on your online broker.