Is only Technical Analysis enough for commodity trading

#1
I am new to commodities and was wondering whether technical analysis is enough for commodity trading or not? If not, what are the other factors I need to consider while trading in commodities?
For example:- If I want to trade in CRUDEOILM and my technical setup is giving me a long/short signal, should I lookup to any other data (for example, a currency pair like CAD/USD having strong correlation with oil) for confirmation? Or is just technical analysis of CRUDEOILM enough?
 
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mohan.sic

Well-Known Member
#3
I am new to commodities and was wondering whether technical analysis is enough for commodity trading or not? If not, what are the other factors I need to consider while trading in commodities?
For example:- If I want to trade in CRUDEOILM and my technical setup is giving me a long/short signal, should I lookup to any other data (for example, a currency pair like CAD/USD having strong correlation with oil) for confirmation? Or is just technical analysis of CRUDEOILM enough?

Is the price in crude determined by supply/demand in MCX market OR the price discovery happens at some international exchange and prices at mcx follow those movements. How it works ?

If crude in our mcx market just follows and closely correlated with international prices, How effectively TA works on our charts ? In fact, is it logical to follow TA on our charts when the prices here are simply derived by other markets.

My question is not just on crude. I have same confusion for all other commodities and metals which are traded in other international markets.
 
#4
It depends upon whether you are trading intraday or positional. for intraday you can prepare a setup on mcx and closely follow usd/inr as it highly effects mcx prices. As i am a positional trader, i purely follow nymex charts and it gives good results. Like crude started showing long signal on nymex on 29/12/2018 whereas on mcx it showed long on 3/1/2019. on nymex crude is now also positive but in between mcx crude showed so many false sell.
 

mohan.sic

Well-Known Member
#5
Thank you vishal for clarifying.

yes, please explain on pure intraday perspective. I follow a volume based pattern for day trading in nifty which has around 65 to 70 percent success overall. But when I tried applying same on copper, its not good, not in sense of profit/loss in trades, but I felt price is not really reacting to volume patterns. There is a gap somewhere. And I started assuming that TA ( especially if based on volumes ) is illogical to follow on mcx instruments as these prices are based on instruments from other markets like nymex. I understand the point of exchange rate influence & yes they impact price here. But for purpose of understanding if we assume that there is no change in USDINR, then the prices of mcx should be broadly a replica Nymex..Right ?
 
#7
Thank you vishal for clarifying.

yes, please explain on pure intraday perspective. I follow a volume based pattern for day trading in nifty which has around 65 to 70 percent success overall. But when I tried applying same on copper, its not good, not in sense of profit/loss in trades, but I felt price is not really reacting to volume patterns. There is a gap somewhere. And I started assuming that TA ( especially if based on volumes ) is illogical to follow on mcx instruments as these prices are based on instruments from other markets like nymex. I understand the point of exchange rate influence & yes they impact price here. But for purpose of understanding if we assume that there is no change in USDINR, then the prices of mcx should be broadly a replica Nymex..Right ?
Exactly my thoughts.
 
#9
@mohan.sic Exactly nymex and mcx follows same pattern. but i stopped trading in mcx on intraday basis, as i gained no success in intraday whatever strategy i apply. currently i use swing trading in nifty, crude, copper, eur/inr & gbp/inr. TA is more helpful in long term trade, for intraday you should try price action trading and avoid trading on US trading holidays.

I am testing a new price action strategy on crude for intraday, if i gain above 60% success ratio, i'll post it here in the forum.
 

mohan.sic

Well-Known Member
#10
Vishal,

So its better to look at nymex charts as they lead the movement ?
But Eod even that may not work at intraday frame as usdinr, and other local factors playin creating negative correlations between movements. Am I right to some extent ?
 

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