Hello and welcome to CantosCharts Masterclass. I'm Sandy Jadeja, Chief Technical Analyst for City Index. Welcome back to another lesson in technical analysis and as always, this is simply for information and educational purposes.

We're going to continue this series by actually taking a look at where we've left off, so refer back to the previous lessons to see what we discussed in those lessons and to see where the markets are currently.

Now, I want to focus, of course, on price action. I always like to look at price action rather than bombarding charts with lots and lots of different tools and technical indicators. So for me, price is important. That's where I will be trying to get you to, to look at price action as the main key indicator. We'll take a look at candlesticks patterns because they're quite useful. Of course, they are very, very popular with traders and we'll of course, include technical indicators and looking at the major trend.

So right now this particular chart we're looking at is crude oil. Now a couple of weeks back we did take a look at crude oil and I said that we should be looking for a break above the $80. The main thing with crude oil, and this has been a problem for many traders, is that it has been stuck in this range between $70 to $80 and a lot of people have been really looking for a breakout on either side. We know that the longer degree trend, and that's on the monthly charts, the prices of crude oil have actually been trending down. So really, this can be considered a consolidation towards the downside, but of course it doesn't mean that it is guaranteed it is going to go much lower. The thing that we're really looking for is clues from the market.

Now once we saw a break above this $80.82, that was suggesting that we could be heading higher and I was really looking for the $85 area to be touched, but something important happened actually.

Now, if you take a look at the chart on the extreme right, what do we see? We see a doji pattern and as I said several times, when we start seeing these patterns there's a possibility of a reversal.

Now it's important they actually occur at key resistance or support levels. This hasn't reached a major level, but nevertheless, it is still there and we should really pay attention to that particular pattern.

But the parabolic SAR that's also quite positive, so that's bullish, but the stochastic indicator, which we've again discussed in previous lessons, is actually on the upper side, so that's suggesting that maybe prices are being exhausted at the current level.

So what actually happened once we looked at this chart and what's happening right now? Well, crude oil declined. It actually paid attention to that northern doji and then markets fell much lower. So as you can see, after the $82.97, it has fallen quite sharply lower and it's heading back down towards the base of the channel back down towards that $70 area.

But also, the stochastic has played out quite nicely and it seems to be approaching the oversold area.

So right now we may be looking for, in the next couple of days or the next week or so, a turn and once we get a turn combined with a positive candlesticks pattern, that may suggest that we might start heading back towards the upper side of the channel.

So it's really just ping-ponging its way between the upper side and the lower side unless of course we see a break below the $69 and the $71 area.

What other information do we have? Well the parabolic SAR, that's negative, so that's a good sign for the bears. That's saying to them that actually this short-term trend is still down and there is a bit of a gap actually. If you take a look at the chart, you can see that around the $78 area is where the parabolic SAR is now residing.

So oil has to do a lot of work to get back towards the upside and change that around. Otherwise we may just consolidate here until the parabolic SAR catches up towards the price level.

But as I say, keep an eye on the stochastic, keep an eye on the price, that will be useful for you.

Now on the weekly chart, the parabolic SAR is actually pointing towards the upside, so what's that suggesting because now we have a conflict here?

Well straight away, if we look at the stochastic, that's almost now crossing over towards the upside. Parabolic SAR is bullish so that may suggest that if we take a look at the daily chart, look out for a possible reversal and then a resumption in the trend towards the upside.

So the intermediate term trend is looking bullish, but the short-term trend is bearish, so there is a conflict there and unfortunately, that's one of the things you're going to face as a trader. You're going to get a conflict and either you step aside and do nothing or you wait for the signals on the shorter term timeframe and you go with the intermediate term timeframe.

Is there anything else we can look at? The market is trading below its moving average. That's suggesting weakness as well and this is on a weekly chart, so I would like to see the weekly chart get back above the 20 period moving average in order to turn bullish as well.

Also, the stochastic has crossed but the MACD, which is a technical indicator we have looked at previously, that's negative, so again, I would like you to make up your mind. But to me, at the moment, it's looking like quite bearish until we start getting a confluence of signals, I would like to see a positive MACD, or I would at least like to see the last bar on the MACD higher than the previous weekly bar. I'd like to see a cross on the stochastic. I would ideally like to see crude oil back above its 20 week moving average and I would like to see a bullish candlesticks formation before we start turning intermediate term bullish for sure.

So there is several clues there that you would have to keep an eye on for the next couple of weeks and we'll keep an eye on these markets, but right now, keep a good eye on the price action. Watch out for the multiple timeframes. Obviously, the weekly, the monthly if you're looking at the much longer term timeframes and of course, the key support and resistance levels. Right now we know that that $70, $69/$70 should provide some good key support. If it breaks through that, there's a possibility that we might even head lower down towards the $67, even possibly $65 as a round number and of course, use these technical indicators. Quite likely, but at least use them to help you make some decisions.

Well I hope this has been useful for you. In the meantime, have a great trading week and I look forward to seeing you in the next lesson. This is Sandy Jadeja.