How do you use candlestick patterns to trade commodities?

Commodities, just like Equities have major varieties in them. There are those type of commodities which are Rangebound, those that are Highly Volatile, and many others which are the traditional trending ones. Hence, the basic rules of the Candlesticks will apply to most of the Commodity assets. We have seen SHARP HAMMER PATTERNS, Engulfing Patterns. Doji's are the most common one formed on many days for Commodity charts too. We, therefore believe that be it commodities or equities, the stance should remain the same, merit based Candlestick charting analysis.

Candlestick patterns are widely used to trade commodities, just as they are used in trading stocks or currencies. These patterns help investors identify potential price reversals or continuation trends in commodity markets. Most common candlestick patterns- doji, hammer, shooting star, engulfing patterns, and etc. indicate potential direction of price movement in coming trade sessions. Its crucial to identify support and resistance levels on price charts to understand a reasonable entry and exit points of commodities. However, don't rely solely on candlestick patterns, rather confirm signals with other technical indicators or price action. A single candlestick pattern may not be sufficient for a trade decision.

Never make perception based on asset class, technically mostly remains same, do scanning / analysis irrespective of asset class, and find the best trade. this is gonna sort most of your problems.

Why are you so keen to help the robots? Ego massaging will cost you in the end. Markets go up and down just as candles are lit and are blown out by the wind.

Most investment decisions are supported by fundamental analysis but candlesticks can help identify position entry and exit points by seeing breaks in trends via critical support and resistance points.

Choosing a time frame to analyze candlesticks make analysis more precise and detailed. The type of trading style would determine the time frame which candlesticks would be analyzed which can give different outlook on higher time frame and lower time frame. Lower time frames are good to consider for entry frames while higher time frames are considered to be great outlook frames.

What is the best time frame in general, irrespective of the asset class? What time frame does most of the traders use? Any time frame that is too small or too large is not recommended for regular trading, Time frame of less than 5 mins will add unwanted noise to the data, obstructing one's view of finding a clear pattern, whilst bigger time frames will miss the minor details that could be the reason for a pattern formation. Finding an optimal time frame takes time, observing the same chart on multiple time frames will teach you volumes, and then choose the one that you feel is the most suited for your style of trading.

Look at candlestick pattern formations around areas of importance and using the body of the candle to determine Bullish or Bearish momentum. Momentum right before a support or resistance might indicate a break of that support or resistance area.

The time frame is determined by your capital and your free time. The longer the time frame, the greater your stoploss will be and the longer the operation will remain open. What is crazy is operating for 1 minute, 5 minutes and even 15 minutes. The most comfortable is 4 hours for trading and days and weeks for longer-term investments.

Know that the identification of candle patterns is not the biggest thing, rather the zone known as area of value that they form. Candle patterns that form on support can give a high potential for a buy opportunity like hammer, inverted hammer, bullish marubozu,, dragon fly, engulfing bullish, three inside-up, piercing candle etc while at resistance patterns like evening star, dark-cloud cover, hanging man, shooting star, bearish harami etc can be a good signal for a sell opportunity in the market.

Confirm the signal you get at area of value with reversal or continuation of candlestick formation pattern. Adopt other form of confirmation to that concept to increase profitability index and confidence, it is actually called "confluence" where multiple confirmations agree in direction of a bias. It could be a key level, premium or discount of fibonacci in the swing, supply or demand zone of higher time frame and so on. This will help to further define entry and exit.

The past helps build the future. so you must have a good backtesting of all the supposed winning operations. Look for previously visited areas, Fibonacci levels and examine what day of the week you are on and what week of the month. End of the week or end of the month the market can make unusual corrections in size and shape.

Trade management should come first before considering what strategy to execute a trade with. By defining risk appetite in a trade, technical analyst will know when to cut losses in case of a fake out after confirmation of candlesticks pattern at a zone. The release of economic data can cause a massive spike in the market of a commodity and that is huge enough to influence the market price.

Candlestick charts are a popular method used by traders and to analyze and interpret price movements in financial markets, such as stocks, forex, or cryptocurrencies. Each candlestick represents a specific time period and shows the opening, closing, high, and low prices for that period. By observing patterns and formations in candlestick charts, traders can make informed decisions about market trends and potential price reversals. If you have specific questions about candlestick patterns or how to interpret them, feel free to ask!

Once you've proficient the technique of setting up trades with candlestick patterns, the next crucial step is to ensure that your capital continues to grow while accumulating both winning and losing opportunities. It's also essential to focus on increasing your rewards relative to the risks involved.

There are two most important things that one needs to keep in mind while trading candles. 1 of 2. CONTEXT Matters: Candles must never be traded in isolation. Examination of a prior trend is a must. Consider the overall market context, such as trends, support and resistance levels, and volume, when analyzing candlestick patterns. For example - Bearish Engulfing Candle -- speaking in isolation, one may jump to the conclusion that it is bearish. But for this candle to be actually bearish, it needs to have occurred following a reasonable uptrend, otherwise, it is not a valid bearish engulfing candle. On the contrary, if a bearish engulfing pattern emerges during a downtrend, it may be a last engulfing candle which hints at a potential bottom.