Gold technical analysis: charts, indicators, and trading strategies
Precious metals, in particular gold, are attractive assets for online trading and investing in two types: medium-term and short-term. When trading gold, you do not even need to purchase the commodity itself: to carry out activities and make a return, you can use futures contracts.
Many people also buy the bars themselves when they decide to invest in gold, protecting their savings from inflation and currency fluctuations. Everyone knows that exchange rates are tied to the political situation in a particular country and the state of the economy of these countries. But the gold rate of gold at all times remains quite high.
Fluctuations in gold prices depend on several factors and usually have a maximum amplitude of about 30%. In the arsenal of experienced traders, there are certain indicators of a Technical, Fundamental, and Sentiment nature that allow predicting the future dynamics of the value of precious metals. In previous articles, we have already considered the Fundamental factors that affect this asset and also given advice on trading precious metals, so today we will look at the Technical analysis of gold in the Forex market and the main aspects you should know.
Gold Technical analysis: graphical and indicator method
There are two main types of Technical analysis of gold: graphical and indicator. The graphical method is a technique based on identifying market trends and signs of price changes directly on the price chart. The graphical method is based on the rule that price patterns repeat.
Watching the price chart, traders may notice that before significant changes in the price dynamics, characteristic figures, or patterns, can be seen on the chart. These figures have received certain names, and their appearance on the chart should mean that, most likely, the price will continue to move in the same way as it most often moves after passing through such figures. You can read more about popular patterns in our article on Japanese candlesticks in trading.
On the other hand, indicator analysis is a method that uses special calculation methods. Indicators look like auxiliary charts that are calculated and drawn in addition to the price chart itself. They are set either on the basis of average prices or on the basis of changes in these prices. Next, we will dwell in more detail on both the analysis of charts and indicators.
How to conduct a Technical analysis of the gold price?
As for Technical analysis, first of all, it is necessary to see the broader perspective. Weekly or monthly candlesticks or bar charts are best suited for this. Positions are best opened in the direction of the trend with deep stops. If playing against the market, then the stop should be much more aggressive. Outgoing news can cause turbulence in the trading markets, which Technical indicators cannot adequately predict, so you should refrain from trading on such days.
The instrument itself has a wide range of fluctuations. For three hourly candlesticks, gold can win back a slow monthly decline. It is very important to follow the developed trading strategy and strictly follow it. Situations when there are a couple of pips left before your stop, after which the price bounces, will occur with enviable frequency, testing the strength of the trader’s nerve resistance. For traders who prefer to work in the short term, 30-minute and 15-minute frames are best suited, as they will be convenient to navigate when calculating position entry points and potential profit.
Gold trading Technical indicators
Also, for trading gold, you can use all the same indicators as for working with currency pairs. The only thing to keep in mind is that the price of gold moves much faster than any other currency or stock.
For example, if the price of a currency can change by 5-6 points in one hour, then the price of gold can go a distance of 20-30 points at the same time. For this reason, it is not recommended to use indicators with lagging signals for metal trading. This includes conventional moving average lines, the classic stochastic, and other similar instruments, the readings of which may slightly lag behind the market movement. You can use these indicators only as auxiliary tools for assessing the general trend, but not for finding market entry points.
Modified stochastic and MACD
Modified versions of stochastic and MACD do not have such a big drawback as a delay. Therefore, you can efficiently use any of them. Also, for work, you can set Fibonacci levels on the chart – they will help you correctly set stop-loss and take-profit for each transaction.
Gold is a highly liquid asset that can rise sharply in price in a short period of time. In this regard, it is better to monitor the size of the brokerage commission. Doing this manually is extremely inconvenient, so it is recommended to use special spread indicators.
Overlay Charts indicator for trading gold
This tool is designed for trading based on the correlation of assets. The price of gold directly depends on the value of the US dollar and the currencies of other developed countries, as well as on the price of oil. If the price of the currency falls, then the value of gold rises as traders begin to invest in precious metals. But with oil, the opposite is true – with an increase in the price, gold also steadily rises. It is not very convenient to track the chart of gold and another trading instrument at the same time. This problem is solved by the Overlay Charts indicator.
Relative Strength Index (RSI) for gold trading
Using the RSI to scalp gold may not be the best option. Because this indicator rarely gives overbought and oversold signals. However, traders prefer to use RSI as a filtering analysis, combining it with other indicators.
Parabolic SAR for gold trading
This indicator can be used to scalp gold. Signals are obtained through the appearance of points above or below the price. Usually, the signal is confirmed if three dots appear from the price. The weakness of this indicator is that this indicator often redraws, so it is possible that after the dot appears, it will disappear again when the price reverses.
Forex gold Average Direction Index
ADX or Average Direction Index is an indicator to measure the strength of a trend. Using the ADX to scalp gold looks for entry when the trend is strong.
Price Action Candlestick Pattern for gold trading
This is a way to scalp gold without the use of indicators. Traders only study price patterns that often repeat their own history. The essence of this strategy is to look for pullbacks in a trend. Or look for trend reversals when the trend has gone too far.
Gold trading strategies based on Technical analysis
Gold trading is considered one of the most popular instruments for trading since this metal has always been in great demand. Working with gold is attractive because this asset is not characterized by sharp price fluctuations. The price of this precious metal is usually actively growing, so more and more traders prefer to invest their finances in it. Let’s consider several examples of trading this metal based on Technical analysis.
The pyramid principle of gold trading
When working intraday, it is wise to use the pyramidal method of gold trading when the position is gained in small fractions. In the course of such work, the chance of getting the most unprofitable deal is extremely small. Price will sooner or later reverse, even if the first few trades weren’t good enough. You can also exit with parts or one big deal. It is best to use moving averages or their derivatives as an entry/exit signal.
Breakout trading of gold
According to the highs of the candlesticks, a channel is built, the breakdown of which is a clear signal to open a position. A stop is immediately placed, which is on the opposite side of the channel and is built on the lows. As the price rises, the stop is pulled higher and higher until the price corrects enough to break it down. Then you should close or roll over the market. The trader regulates the proportions of the position himself, but he should be guided by the principle that the narrower the channel, the larger the deal should be. According to this principle, gold trading is more suitable for medium-term traders.
Counterbreakdown principle in gold trading
It is a mirror of the above trading plan. Instead of going long on the breakout, the trader should go short. The bottom line lies in the idea that the price will not be able to break through its maximum and will push off from it. This trading strategy is more suitable for short-term traders and can be used even intraday. From a psychological point of view, gold trading according to this principle is the most loyal.
Copy trading of gold with Forex and CFD brokers
It will take some time to master the Technical analysis of gold and apply this information in practice, but if you want to try trading this shiny metal without drawing this out into a lifetime special, you can try out a Copy Trading, which will save you time and will help you become a more experienced market participant.
Copy trading is a strategy built on the repeating of transactions of professionals. Trading newbies often resort to this method. Its essence is that the service users monitor the actions of experienced professional traders and make duplicate transactions, in other words, copy them. At the same time, copying transactions can occur both in manual and automatic modes.
Thanks to this feature, the trading process is greatly simplified. There is no need to study the market for a long time. The user gets the opportunity to use ready-made algorithms. This becomes particularly relevant when working with various tools such as gold or different metals.
eToro is the best Social and Copy trading platform, where users can engage in CFD trading, as well as interact with each other. The broker provides the opportunity to copy the transactions of successful investors, as well as use the advice of experts. A trader can resort to the automatic creation of a balanced portfolio.
In addition, eToro introduced The Pause Copy Feature in Copytrader, which allows you to stop copying the trader, in fact, without closing all the positions open at the moment.
Also, the company has such a wonderful function as eToro’s Smart Portfolios. Each Smart Portfolio combines different assets or groups of traders and is constantly optimized using machine learning algorithms.
Best VPN for secure gold trading
Many of us are already familiar with VPN services that allow you to maintain anonymity, and confidentiality and gain access to various streaming, but not many people know that professional traders use VPNs in Forex transactions. For example, on a trip, when you need to go to the website of your broker, and for some reason, it is not available in this country, VPN will help bypass the geo-restricts and give full access. In addition, the VPN will protect payment systems for Forex deposits and withdrawals with tunneling and reliable encryption, and also prevent various phishing and hacker attacks. But the possibility of services is not limited only to these functions. VPN for trading hides activity from your Internet Service Provider if you do not want it to limit your Internet activity so otherwise.
ExpressVPN is one of the best VPNs on the market today and can be downloaded in many languages for almost any device, which is a big plus. The company has the ability to connect to at least 3000 different servers in 94 countries and 160 different locations. It uses the exclusively developed Lightway protocol in addition to standard options such as OpenVPN (UDP and TCP), IKEv2, and L2TP/IPSec. ExpressVPN has 256-bit AES encryption using the latest technology, so it will be almost impossible to decrypt your content.
Click the button below to get the best VPN deal for Forex trading:
In addition, the company does not keep any record of the activities that have been carried out by the user. It also does not log DNS requests, meaning it does not store any type of cookie.
Top trusted brokers for the trading gold derivatives
Online trading of precious metals has been an extremely popular business for many centuries. Gold is the flagship among other metals, so operations with it will be interesting for both conservative and speculative traders. Due to the high volatility that builds a trend over time, trend and counter-trend trading strategies will be equally useful on gold, but at different time intervals.
However, before starting real trading, beginners and experienced traders should test their knowledge in Technical analysis and application of indicators on a free brokerage demo account with a virtual balance of up to $100000.
It should also be mentioned that you can open not only one brokerage account, but several with different brokers in order not only to compare trading conditions but also to collect all kinds of Forex bonuses up to 100% on the first deposit. Register, verify your account, start trading with Top Forex Brokers, and get your trading experience in various markets.
XM Group gold trading
XM Group is one of the largest online Forex brokers with over 500000 clients worldwide. The broker has very loyal trading conditions, an abundance of bonus programs, and an excellent reputation.
XM has been in the industry for over ten years and has accumulated enough experience to provide over 1000 trading instruments such as currency pairs, CFDs, stocks, gold, energy, commodities, and more.
Traders can open four account types: Micro, Standard, XM Ultra Low, and Shares. In addition, you can open a demo account with a deposit of $100000 to improve your skills without fear of losing your real deposit.
Among the terminals are MetaTrader 4 (MT4) and its newer version MetaTrader 5 (MT5). You can download any of the platforms on your mobile, or PC or trade online. The advantages of both platforms are that they are versatile, and provide analytics, experts, and more. In addition, XM provides customers with a VPS service that allows them not to worry about the speed of the Internet connection, computer problems, or other interfering factors.
Since XM operates in many countries, the company follows the regulatory standards of organizations such as the Australian Financial Commission (ASIC), Belize (IFCS), Dubai (DFSA), and Cyprus (CySEC). The broker has a very attractive bonus program of up to 100% for the first deposit. You can get a special offer right now by clicking on the button below.
HF Markets gold trading
HF Markets, formerly known as HotForex, is a multi-regulated online broker that has received many awards for its services. The company provides access to such assets as indices, currency pairs, energies, CFDs, and more in its list of offers. In addition, it is worth paying attention to the favorable conditions for trading gold, namely flexible leverage, low spreads, and no hidden fees.
Several types of accounts can be registered on the HF Markets official website: Micro, ZeroSpread, Premium, PAMM, Islamic Account, and HFcopy, as well as a demo account where you can hone your trading skills without the risk of losing your real deposit.
Clients can access various markets using MT4 and MT5 terminals, which are available on desktop, web, and mobile devices versions for Windows, iOS, macOS, and Android. HF Markets also provides a VPS service for a stable connection.
HF Markets is a highly regulated broker licensed by CySEC in Europe, FCA in the UK, FSCA in South Africa, DIFC in Dubai, and SFSA in Seychelles. Try trading with HF Markets and check out all its features by clicking the button below.
Exness gold trading
Exness is one of the most powerful and significant companies in the market, providing users with transparent trading on Forex and CFD with such instruments as stocks, indices, metals, energies, and popular Cryptocurrencies to clients around the world.
The broker does everything to make the interaction of participants in exchange trading as comfortable as possible by providing a convenient workspace, which involves trading in MT4 and MT5 terminals, as well as Exness’s own web terminal, which includes an intuitive interface with unique charting technology, as well as more than 50 drawing tools and 100 indicators. The broker also provides mobile trading for iOS and Android. The company also has free VPS hosting, which allows remote access to the trading terminal.
Clients can register accounts for retail and professional traders. Also, for the convenience of new clients, the broker offers a trial demo account.
The reliability and legality of the activities of any broker should be documented. This company meets the brokerage standards of such organizations as FCA, CySEC, FSCA, FSC, FSA, and others. Try trading with Exness using our dedicated button below.
NAGA Markets gold trading
NAGA Markets is a classic, well-regulated broker that is also well-suited for beginner traders. It offers an excellent WebTrader (for computers) in addition to MT4 and MT5, as well as a mobile application for iOS and Android.
Clients can trade currency pairs, CFDs, Cryptocurrencies, indices, commodities, ETFs, futures as well as real stocks on real, Professional, as well as VIP accounts. Also, anyone can use a demo account to practice and test their trading strategies.
You can top up accounts or withdraw a deposit in various ways convenient for you, including bank transfers, cards, other payment methods (for example, Skrill, P24), as well as Cryptocurrencies.
NAGA is an authorized broker with CySEC in Cyprus, which gives it the ability to serve EU clients in accordance with European MiFID and ESMA requirements. In addition, NAGA is licensed by the FCA. Try trading with NAGA and get a special offer from TopForex.trade by clicking on the button.
OANDA gold trading
OANDA is an international brokerage founded in 1996 in the United States, which was one of the first companies to provide online currency exchange services. In recent years, the broker has really grown into a global corporation and offers, in addition to currencies, such instruments as CFDs for indices, commodities, metals, Cryptocurrencies like Bitcoin and Ether, and bonds.
The company provides several types of demo, Standard, and Advanced Trader accounts for trading on OANDA Trade’s fully customizable co-web and desktop and MT4 terminals.
Studying at the Oanda Academy is possible both independently and under the guidance of an experienced instructor. Free training includes access to an extensive electronic and video library, as well as valuable Forex and CFD analytics.
Oanda does not charge any fees for deposits or withdrawals that can be made with credit/debit cards (Visa, MasterCard), Paypal, bank wires, and electronic bank transfers (Faster Payment, Bacs, CHAP, SEPA, and others). Try all the OANDA opportunities by clicking our special button.
Related articles:
Learn how to trade Gold with HF Markets (formerly known as HotForex): flexible leverage, no hidden fees, low spreads, and advanced risk-management tools. How to open an account and receive a Forex bonus on your first deposit of up to $5000, and use Copy trading.
Expert tips on gold trading: 10 best pieces of advice to boost your gold trading strategy, as well as a comparison of Top Forex brokers for making deals with gold, the ability to copy trades, and the free VPS service.
Read about the basics of trading with risk management tools in the Forex market: key order concepts, distinctive features, and their usage examples. Comparison of the best Forex brokers with user-friendly trading platforms, bonuses up to 100% on the initial deposit, and free VPS service.
Gold technical analysis - FAQ