Commodity forex online trading cases 4 and 5
It is now time for case 4 and 5 when commodity forex online trading, continuing from commodity day trading case 1, 2 and 3. Let's keep on exploring one of the best commodity trading systems...
The Value Area.
Remember that it represents 70 % of the volume traded the previous day in commodity day trading.
Also remember that the value area represents a trading range where the top and the bottom provides support and resistance.
- Market opens below the previous day's value area and STAYS below it when commodity forex online trading:
Ok my friend In the fourth case of commodity forex online trading we have that when the commodities market opens below the previous day's value area and DOES NOT get inside the previous day's value area, a strong bearish signal is triggered.
Now, If the commodities market does get inside yesterday's value area, just as in case number 3, we can have the 80% rule coming into place and we should exit our short position immediately.
In the above example (click to enlarge charts) you can see how the commodities market had been trending down for 2 days. You can also see how the previous day's value area offered resistance when the commodities market opened below it and then tried to move up towards the previous day's value area.
We get a bearish signal to enter in the 30 minutes crude oil chart on the bottom of the previous day's value area.
Here is another example in commodity forex online trading the emini s p.
- Market opens inside previous day's value area:
In the fifth case we have that when the commodities market opens inside the previous day's value area and remains inside the previous day's value area, no strong signal is triggered. In this case we have a balanced market, which means that the market is in equilibrium, presenting no clear opportunity.
Now this in terms of a very good trade location!
NONETHELESS, the top and bottom of the previous day's value area could offer some potential support and resistance levels if price starts moving to the extremes of the "bulge" or the previous day's Value area.
Remember the value area is nothing more that a range or sideways movement, the top and the bottom of a range offer support and resistance.
Example below of the Corn Futures.
Ok my friend now I am going to give a final detail here about where to put stop orders.
Stops orders in commodity forex online trading:I put my stop orders inside the previous day's value area when the commodities market opens above or below it. NOT in the top or bottom of the previous day's value area.
Because most futures markets (especially electronically traded markets) are extremely volatile. Think of support and resistance numbers as an area and not just a single price.
If you place your buy stop order (to cover) at the very bottom of the value area (if you’re shorting the resistance created by the previous day's value area as in case 4), then you run the risk of getting stopped out of the commodities market if it only touches the bottom of the previous day's value area instead of actually trading back into the value area.
I want to see if that particular level will hold, not necessarily just that one price. Keep that in mind when commodity forex online trading.
Go back to commodity trading system from cases 4 and 5 in commodity forex online trading
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