# Principle No 1:
In commodities, wherever the cash price of a commodity goes, the future price of that same commodity will generally follow.
Future price may fluctuate in a range a bit some or below cash prices but never very far prices but never very far. As a trader in commodity contracts, you will want to buy future contracts if you expect a rise in the actual commodity's price and sell future contracts if you anticipate a decline in the price of the cash commodity.
# Principle No 2:
When cash prices advance or decline out of a long narrow trading range, they usually continue to advance or decline for several weeks or months before returning to their original price level.
# Principle No 3:
Since future prices follow cash prices, never buy commodity futures contract unless you anticipate an advance in cash prices. Never sell commodity future contracts unless you anticipate a decline in cash prices.
# Principle No 4:
If you do decide to buy don't buy until y prices actually do advances. If you do decide to sell, don't sell until prices actually do decline.
Some of Important Commodity Trading Terms
Support
Support is when the price of a commodity future hits a low and doesn't seem to want to go any lower.
Resistance
Resistance is the price of a commodity future hits a high and doesn't seem to want to go any higher.
Saucer Bottom (Cup Handle like)
Saucer bottom is the price break above the handle on higher volume, it usually signals a trend change.
Key Reversal
On a downward turn around, in addition to the higher high and lower low, the key reversal day will also have a close lower than the previous day's close.
On an upward turn around, in addition to the higher high and lower low, key reversal day will also have a close higher than the previous day's close.
