Commodities 101: Lesson 3 of 5

Market Analysis for Commodities CFDs 

  • Overview of technical analysis in Commodities CFD trading 
  • Introduction to fundamental analysis and the impact of economic events on commodities 

Technical analysis in Commodities CFD trading  

Technical analysts believe that market trends, as shown by charts and other technical indicators, tend to repeat themselves and that historical price data can be used to identify these trends and predict future price movements. In the context of Commodities CFD trading, technical analysis can be used to analyze the price movements of the underlying commodity to identify potential trading opportunities 

Some of the key technical analysis tools used in Commodities CFD trading include: 

  • Charts: Technical analysts use charts to display and analyze price data, including line charts, bar charts, and candlestick charts. 
  • Moving Averages: Moving averages are used to identify trends and help to determine the direction of the market. 
  • Trendlines: Trendlines are used to identify support and resistance levels, and to determine the strength of a trend. 
  • Oscillators: Oscillators, such as the Relative Strength Index (RSI) and the Stochastic Oscillator, are used to determine overbought and oversold conditions. 
  • Volume: Volume is used to confirm trends and to identify potential trading opportunities. 

Fundamental analysis and economic events

Fundamental analysis is a method of evaluating securities by analyzing economic, financial, and other qualitative and quantitative factors to determine a company or commodity’s intrinsic value. In the context of commodities trading, fundamental analysis is used to evaluate the impact of economic events on the supply and demand of a particular commodity, and to make informed trading decisions. 

Economic events that can impact the supply and demand of commodities include: 

  • Interest rates: Changes in interest rates can impact the demand for commodities as they affect the cost of borrowing and the overall level of economic activity. 
  • Inflation: Inflation can impact the demand for commodities as it affects the cost of production and the purchasing power of consumers. 
  • Employment: Employment trends can impact the demand for commodities as employment levels affect consumer spending and overall economic activity. 
  • Economic growth: Economic growth can impact the demand for commodities as it affects consumer spending and investment in infrastructure. 
  • Political events: Political events, such as elections and changes in government policies, can impact the supply and demand of commodities. 

What’s Next?

Congratulations on completing Lesson 3 of 5! But don’t stop now—there’s so much more to learn.

Happy trading, and see you on the other side of Lesson 4!

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