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 having a look at the markets as to what's happening right now.

Take a look at this first chart, what do you see? We've got no indicators on there, no chart patterns that really stand out, or is there something that you can see that's giving you some sort of information. This is a daily chart and we'll reveal what this is in just a few seconds.

This one here is a weekly chart. Do we see anything different? Well the main thing that stands out is we can see that we are in a sideways trend. In other words, we're in a consolidation. These markets are very difficult to trade. When a market is non-trending you can get chopped around quite a lot.

So here what we're looking at is crude oil and we're back to the daily chart. The first thing that really stands out is a five wave structure. Markets often move in waves of threes and fives and when you start seeing completions at threes and fives, you've got to be aware of a potential reversal. So at three we could have been looking for a reversal, but once we got the wave four, the market broke above three and that's when we can say right, we're looking for a five wave completion and that's what's happened.

So what else can we do in order to help prepare us for a potential reversal? Well here what we have is the parabolic SAR and also a classic stochastic indicator. Now the stochastic indicator was trading in the upper range. That was suggesting that the market may short-term be at a price high, so we would look for a crossover which has actually occurred, but also we saw a break on the parabolic curve, so that was also suggesting that maybe the move should be towards the downside. Once the break occurred on the parabolic, what do we see? We saw two sharp days towards the downside, so that's a very good short-term trade if traders have caught that.

Now also here, again, the candlestick reversal pattern, a classic doji. So, in other words, when you see a doji there's uncertainty and the way to trade it is once the doji occurs, if you're bearish, wait for a break towards the downside of that particular bar. If you're bullish, you would wait for a break towards the upside.

So in this case here we've got a five wave pattern complete. We had a stochastic crossover and then we had a doji followed by the parabolic break. So in all fairness we could say that at least for the short-term crude oil still looks bearish. But for the longer term we know we are still stuck in this sideways range.

So if you're uncertain, stand aside. If you're aggressive trading, tactics are going to help you out, then of course you want to be trading the very short-term charts; anything from a day to three days, or even the hourly charts.

So far, crude oil has moved quite sharply towards the downside. We may see an ABC or a three wave correction towards the downside. So once the move has completed, we would wait for a follow up to the upside followed by a further move to the downside again. But again, overall, choppy price action in crude oil.

So again, observe the overall picture, take a look at the weekly charts, daily charts, use multiple timeframes and apply the parabolic SAR. I know a lot of you have commented saying that you have found the parabolic SAR quite useful. It's one of my favourite tools. Also watch out for consolidation breakouts. In other words, when markets are tightening up, you look for an expansion move to occur and then the candlesticks patterns, they're quite useful as well.

So overall, we've used a variety of technical indicators and chart patterns and this should help us as technical traders.

Hope this lesson has been useful to you. Have a great trading week. This is Sandy Jadeja for CantosCharts Masterclass.