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

In this lesson we'll take a look at the current market movements and of course we want to use simple technical analysis. We don't want to get too complex.

Today we'll focus on crude oil because finally crude oil has seen a nice move towards the upside. Now we must point out that crude oil has been trading in a range for a very, very long time and traders have been expecting a move either towards the upside or towards the downside. That's what happens. When we see this sideways market taking place we need a confirmation from the market rather than trying to guess.

So what do we see right here? This is a daily chart. We can see towards the right hand side of the chart we've seen a move towards the upside. We've taken out the recent highs. Is this a bullish move? Well I'll take you towards the weekly chart because when we take a look at the longer term picture we can straight away see we're still stuck in a channel. So I wouldn't want to jump onboard right now and turn bullish just yet. The upside level, the $78 level, really needs to be cleared and sustained if we are going to start seeing a move towards the upside. Who knows, this might be stuck in a range for several months. We just don't know that yet and we have to wait for the market to reveal its hand.

Now if we zoom back into the daily charts, the first thing that I want to point out to you is that we seem to be getting higher highs. The $82.77 level was the recent high. Then $84.45 had broken above the $82.77 and now we're trading a little bit above the $84.45. Also note that I've marked off one and two. We've broken above point one. That was suggesting that we had a small consolidation pattern just there, so that was a nice move. You would have taken a break above that high and have the expectation that we could be reaching toward $84.45, then we've reached our price targets. That's quite nice.

Also point two seems to be a higher low. When you get this kind of set up, that's usually an early indication that there might be a potential change in the trend. So who knows? If crude oil is going to continue higher, we need to see the $87 level clearly broken and then get back towards the $93.55. So at the moment, long-term, crude oil is still stuck in a sideways range. Short-term, we are starting to see higher highs, higher lows and breakouts of consolidations on the daily timeframe. So this may be a potential indication that we might be heading back towards $100 mark.

Now the parabolics are also very, very useful. You will notice that I've got two arrows there and this is the daily chart on a December contract. Once the market has broken above the upside of that parabolic move that was your indication that we could initiate a long position.

But also notice that when we had the break above the parabolic, the stochastic indicator also crossed giving us a double confirmation that we could probably be looking for a safe move towards the upside and so far, in both cases on the break of the parabolic and a cross-over of the stochastic, it has provided us with two very good moves and it looks like if we start seeing a move towards the downside, we would wait for the stochastic indicator to cross back up again and that might initiate your next move.

Now of course, bear in mind that candlesticks are also very useful just as price patterns as well and with the arrows, what I'm pointing out to you here is classic spinning top patterns. When you get a spinning top on a candlesticks pattern that is indecision. So when a market has moved towards the upside you get a spinning top. You might want to tighten up your stops. You might want to trade the break below of the spinning top and in the first two of the tops cases, or in fact the first three cases, you can see these have worked quite nicely. Also, on the downside, the spinning tops have worked quite well.

So if crude oil has moved up right now what do we look for for a reversal? A spinning top, maybe a harami, a bearish engulfing pattern. Whichever pattern you're looking for, just make sure that if it's a reversal you'd be looking for a break towards the downside of that pattern and that will be a safe place to short the market for very, very short-term moves. If crude oil does end up being a nice long-term bullish move, then, of course, it will be safer to buy rather than sell. But this depends on your own personal trading plan whether you're short-term or intermediate.

So trade with the trend and of course use two timeframes, both the daily and the weekly, or if you're intraday trading, trade with the hourlies and the dailies and pay attention to the key dailies and pay attention to the key support and resistance levels and watch for reversal patterns on the candlesticks charts.

I hope this lesson has been useful for you. I look forward to seeing you in the next lesson. Have a great trading week. This is Sandy Jadeja.