Hello and welcome to CantosCharts Masterclass. I'm Sandy Jadeja, Chief Technical Analyst for City Index.

We're back with another lesson on technical analysis and how to trade chart patterns. As always, these are simply for information and educational purposes only.

Well, what does the chart reveal? That's one of the key questions I get often is if I look at a chart right now, what is it telling me. So that's what I want to cover in this particular lesson, taking a look at one of the current markets.

So I want you to lose the opinion, I want you to lose the fact that you know what's going to happen in the market. Instead, start looking at the charts to see what they reveal to you and what pieces of information it is telling us. So the idea is to use simple tools and simple applications in order to make some sensible trading decisions.

Now, take a look at this chart over here. What do you see? What is the market telling you? Clearly, the market is moving towards the upside. We've got a few bearish candlesticks on this particular chart. But if you look from left to right, is it going higher or lower and this is going higher.

But this is a trick question because it just determines what timeframe that you're looking at. If you're on the short-term timeframe, then of course this looks like it's going up.

But if you zoom out, and if you zoom into a different timeframe, then that's giving us a different picture. We can see that crude oil had taken a very sharp decline to the downside and then of course we've been edging higher but trading in a longer term sideways consolidation pattern. So you can see how looking at charts from different angles can give you different pictures and that's what we want to do as traders. We must look at the bigger picture and then we must look at the near term picture to see exactly what's going on right now because that's where the subtle changes will be picked up on.

So on crude oil let's see if we can decipher any further information. Now, this again is zoomed in and as I said, the timeframe tells us a slightly different story. But on a short-term timeframe, on a daily chart, again we've seen a decline towards the downside.

Now you'll notice during that decline that we did have a consolidation before the move continued on the lower side and then of course we've been edging higher. So if had been looking at your hourly charts, then of course the market has been bullish.

But still, have we taken out the recent high from where the market fell? No. Have we taken out the extreme low? No. So that's telling you those are the two extreme levels that we need to watch for. But this is of course trading more towards the downside, so it's telling us that possibly crude oil may be about to reveal some more bearish conditions.

Now, the moving average, that's something we've looked at before. Is this technical indicator helping us on this particular market? Well you can see that crude oil has been hugging the 20 period moving average and it hasn't really given us much to play with. There are times when it has been trading a little bit on the upside and then it chops and comes back down towards the lower side. So not a great tool in this condition where the market is trading so what I would probably do is if it is not working is just to simply remove it.

Now, if go back to just looking at price action, that reveals a better picture. We can see that initially when the market was trading sideways we had a pivot low on the candlestick where we had broken the support. So in other words, the market created a pivot low, then it rallied higher, created a high at 92.18 and then came down and had taken that pivot low out and fell sharply lower for another two days and then it stabilised and created a bear flag. This is something that we've talked about in a previous lesson. Then of course it continues to the downside. So the bear flag actually worked out quite nicely. You could have traded the break of the bear flag. You could have traded the break of the pivot low of 80.43.

But also, what else do we have? We can see that we have a larger degree decline. In other words, we can see that this move towards the downside has been quite sharp and then the market made a low at 69.62 and since then it has been correcting itself towards the previous move. So the real question is, looking at this market right now, what are we doing? We're in a sideways trend. What was the previous trend? It was bearish. It was towards the downside. So technical analysis suggests that the market should continue another move towards the downside, but we need to look for breaks of particular lows.

So again what do we have in terms of information? We have the $80 psychological level. Notice how the commodity came down to $80.43, close to the $80 mark. Stabilised there for a few days, rallied back up a bit and then came right through the $80 psychological level. Where did it stop? $70. These round numbers are so important and they're so simple to use that it's nice to have them on your charts.

So since then, since the $70 low, we've actually been trading in a channel between $70 to $80. So we would need to see a break on either side. The bulls want to see a break above $80, the bears want to see a break below $70.

Now notice I've labelled this as one, two, three and these are key points. So one would have been an initial point where if the market broke above that high we could have taken a short-term long position which actually occurred. Then the market declined, came down to two. Didn't take the $70 level out, but then rallied back above the pivot high of one and then created a pivot high at three. So the information we have right now at hand is that crude should ideally break above point three to continue a move towards the upside, or take out pivot point two to continue towards the downside. If it takes out pivot point three, what psychological level do we have above $80? $90. Okay, then of course the all important $100. Of course you can break it down. It could go to $85, $90, $95, $100. If it breaks below pivot point two, immediately we have $70 as support and then $65 and $60.

So this is how you can take a look at charts on a very simple basis using very simple tools and chart patterns which we've discussed in previous lessons. So I suggest you refer back to these lessons.

So also use multiple timeframes. It's looking at your weekly, your monthly and your dailies and then see the obvious and determine the major trend and of course discard indicators that don't give you a clear picture. There is no point having noise on your charts if it is not going to help you out. Then look for price levels and price patterns. These suggestions should help you see a much clearer picture and hopefully become a better trader.

I hope you've enjoyed this lesson. I look forward to seeing you in the next technical analysis lesson. Have a great trading week. This is Sandy Jadeja.