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Commodity Price Patterns
Although commodity prices may or may not repeat themselves commodity price patterns do. In fact, it is because history repeats itself that technical analysis tools work to predict the next move in a commodity price. Certainly commodities traders have long had an intuitive sense about the commodities markets. However, it was not until Japanese rice traders developed Candlestick charting techniques in the days of the Samurai more than three centuries ago that there was an organized and teachable system for commodity trading. Today a beginning commodity trader can take commodity and futures training to learn about Candlestick trading tactics as well as modern technical analysis terms for the same Candlestick pattern formations that guided traders centuries ago.
The basic price of a commodity comes from the law of supply and demand. Inflation will make commodity prices higher in dollars even when a commodity such as gold will still buy the same amount of food or a house for the same weight that it did a century ago. Predicting changes in the basic price of a commodity is a matter of fundamental analysis. Following commodity price patterns is a matter of technical commodity analysis.