Crude Oil 1 Hour Demand Zone Trade (Lots Of Questions!)

Hi Webby,

Sorry to disturb you again. I really want to learn how you trade the market. 

Below are screen shot of Crude oil trading in 1hr chart. I marked the demand level since the market making HH and HL.

With this kind of chart, how can i open trade? is it need to go to lower time frame to find engulf or pinbar formation? or i can put pending order?

I know this is crude oil and im not sure if any bank involve in this crude oil trade.

thank you in advance for your help and comment.

regards,

Hi Webby,

Thank you for your kindness for replying my questions and explained detail regarding my mistakes and what i should do.

After reading your email, i got understanding and look back to my chart to do some analisis. After sometimes of analisis and following your advice for putting correct demand and supply are, i have more questions that come out as below:

1. After i put demand or supply area as you advice, I go down to 5m chart TF and look for engulf candlestick and trade accordingly, am i right with going down to 5m to look for engulf or i just stick with 1hr TF and look for engulf?

2. If the trade i take from 5m chart, the stop lose is couple of pips below engulf candle or below demand that i marked in 1hr chart?

3. if i take trade on 5m chart, the profit target determine at 5m chart or i can use 1hr chart for profit target?

4. How to handle range area? can i still able use this method to hand range area?

5. May i know your opinion between trading forex and futures market? 

Sorry for asking many questions. I hope im not disturbing you, if i disturbing you please do let me know. 

Happy weekend and enjoy your weekened.

Thank you

Your analysis of Oil looks good overall.

The only thing is, that down-move might actually be the start of a reversal instead of just a pullback. It’s hard to say for sure without seeing the daily chart, but aside from that, everything seems solid. You nailed the entry, drew the zone correctly, and most importantly:

You’re thinking about the banks’ actions rather than getting bogged down in technical indicators.

PRO TIP: it’s usually better to wait for an engulfing candle to form on the same timeframe where you drew the zone. So, if you have a 1-hour supply zone, look for a bearish engulfing candle on the 1-hour chart within that zone.

You can use a lower timeframe for entry, but I’d only suggest that for experienced traders who are really comfortable with engulfing patterns on the zone’s timeframe.

If you do use a lower timeframe for entry, your stop loss goes above or below the zone on the timeframe you originally drew it on. For example, if you spot a 1-hour supply zone and then go to the 5-minute chart for a bearish engulfing candle, your stop loss would go above the 1-hour supply zone. Placing it above the engulfing candle itself is a more advanced technique that requires a lot of experience.

Always remember to use the chart where you drew the zone to determine your profit target, not a lower timeframe.

I’m not quite sure what you mean by “range area.”

If you can send me an image or example, I’ll gladly clarify that for you.

As for Forex vs. futures, they’re fundamentally similar. There are some minor differences, but not enough to make one inherently better than the other.

Hope this helps!

PAN.

Hi Webby,

Thank you for your reply and explanation.

I roughly got your points and digesting recently. regrading the range area, i got the answer from one of your article and knew how to trade SD area when in consolidation.

I took a sell trade from supply today on WTI. I attached 3 charts in this email, Daily, 4h and 1h chart since your broker dont have WTI market.

I put my explanation on the chart why i took and what is my thinking when i want to open trade.

once again, thank you for your help in teaching me to be a great trader in near future and replace my 9-6 job. 🙂

thank you

Leo

No problem mate, happy I could help.

Your analysis of the Oil trade seems solid.

The only thing I might have done differently is place the take profit at the edge of the 4-hour demand zone instead of the support level. That 4-hour demand zone is where the banks last jumped in with buy orders, so if they want to keep those trades open, they’ll likely buy again before the market drops through the zone.

That makes it a logical spot for a take profit.

But honestly, it’s a minor detail, and you still made a decent profit, so it was a good trade overall! I especially like how you’re focusing on what the banks are doing instead of relying solely on technical indicators.

I took a look at the Oil chart myself, and things are a bit tricky to read right now. I’m not convinced that the recent downward move is the banks trying to reverse the market. It could simply be them taking profits from their earlier buy trades during the big move up from 46.00.

In fact, I think we might see more upside in the coming weeks.

That large bullish pin bar that formed on the 13th caught my eye.

It’s a good bet that the banks placed a bunch of buy orders there, setting up for the next leg up. It makes sense too, because a lot of traders probably panicked and sold when that pin bar was forming, giving the banks a chance to scoop up those sell orders.

The low of that bullish pin bar is a crucial level to watch.

If we see a break below it with candles closing below the low, the market could drop down to 46.50, which is where the banks last placed a significant number of buy trades.

For long trades, I’d wait for a break above the 52.55 high.

That high could be from banks taking profits or placing sell trades to reverse the market.

Even though I’m leaning towards profit-taking, we can’t be 100% sure. So, let’s wait for a clear break above the high before considering a long trade. And remember, a “break” means the candlesticks actually close above the high, not just a quick spike.

Cheers,

Liam Webb – PriceActionNinja.com