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Gold is one of the largest financial market in the world. Traders invest in the market popularly known as Gold for speculation purposes. Traders are attracted to trading because of the following reasons:

Trading Leverage - trading leverage means that traders can make more money in gold trading by investing little of their own capital. This is because traders can borrow money to trade with from their broker using leverage.

Liquidity - The fact that gold trading is one of the biggest financial market in globe means that there are very many traders trading the market at any time of the day or night during the market week. The fact that there are many traders investing in this market make the market a very liquid market meaning trader can open & close trade in a matter of seconds.

Low Transaction Cost - Because in gold trading there are many traders trading at any one given time means that trade costs are lower because of this big volume of trade transactions taking place in the market. The only transaction cost paid by the trader is the spreads; no other cost is paid by the traders. The spread is also only when a trader opens a trade: therefore if a trader does not trade then they do not pay any cost.

This learn tutorial presents the different education tutorials that technical traders or traders who want to learn trading analysis can learn from. After traders have learnt the basics of trading it is then time to learn more about trading analysis topics that they can use to trade with.

The xauusd analysis tutorials can guide beginners on how to study the various technical analysis concepts.

Basics of Analysis

Candle Charts

For technical traders the basic trading analysis tool that they use is the chart. There are three types of charts: line charts, bar charts & candlestick charts. The type of chart most commonly used by traders is the candle chart. This is because the candlestick chart has a visually appealing format that clearly represents the movement of market prices, by displaying different colors for different movements; that blue color when prices close higher than they opened or red color that represents when prices close lower than they open. In addition these candlesticks show the distance between the open and close price & this forms the body of the candlestick. This body of the candle is looks similar to the wax part of a real candle. The highest point of the price will be drawn with what is known as a shadow, the shadow is a thin poking line that is drawn above the candle and it looks similar to the wick of a real candle. There is also another shadow drawn below the candlesticks and this one represents the lowest point of the price.

The information drawn by the candlesticks is known as OHCL - which represents the Opening price, High, Low & Closing price.

Japanese candles were developed in Japan by a traditional rice trader that used to trade futures, his name was Homma Munehisa, he later moved to trading the Tokyo market that was in the 18^th Century and he made a fortune trading the Tokyo market using these candlesticks: He is said to have made over 100 consecutive winning trades.

In addition to showing the graphical representations of price traders also use candle patterns to gauge and determine the strength of the price movement. Traders also study these candle patterns so as to learn how to interpret and signals from the different candle patterns. Traders wanting to about the various candlesticks patterns can learn from our section under the trading analysis lessons, the various candlestick patterns used to trade are:

1.Long and short Candles

2.Spinning Tops & Doji Candlesticks

3.Hammer Candle Pattern and Hanging Man Candle Pattern

4.Inverted Hammer Candlestick Pattern & Shooting Star Candle Pattern

5.Piercing Line Candlestick Pattern & Dark Cloud Cover Candle Pattern

6.Morning Star Candles, Evening Star Candles and Engulfing Candles Patterns

Support and Resistance Areas

Some traders also refer to these levels as support & resistance lines. The concepts of support & resistance zones refers to price levels where it's difficult for the price break through and move beyond these levels.

At these levels traders are likely to perceive the price of the instrument as being cheap or as being expensive.

Support

Support prevents the price of an asset from getting pushed downwards. Support levels are hence regarded as the floor because these price levels prevent the market from moving prices downward past a certain point.

Resistance

Resistance prevents the price of an asset from getting pushed upwards. Resistance levels are thence regarded as a ceiling because these price levels prevent the market from moving prices upward.

Hence, these levels may be used by trader to determine where to open trade positions at the points where there is a high risk to reward ratio. For example a trader might open a buy trade at a support level & place a stoploss order a couple of pips below that level. The trader buys at this point because they perceive the price to be cheap. A trader might open a sell trade at a resistance zone & place a stoploss order a couple of pips above the resistance zone. The trader sells at this point because they perceive that at that point the price is very expensive and therefore there will be less people willing to buy gold because the price is very expensive and therefore the price is likely to start moving down soon rather than continue to move upwards.

Trend-Lines

Trend lines are used to determine the overall direction of the market.

Sometimes support and resistances are formed diagonally in a similar way like a stair case. This forms a trend, a trend is a sustained movement in one direction either upwards or downward.

A trendline depicts these points of support & resistance for the price.

Trend line is an aspect of trading analysis that uses line studies to try and predict where price will move next.

A trend line is a straight diagonal line that connects two or more price points & then extends into the future to act as line of support or resistance.

Trend-Lines are based upon the idea that markets move in trends. Trend Lines are used to show 3 things.

The overall direction of price movement up/down.
The strength of ruling price movement and
Where future support & resistance of the current price movement are likely to be located at.

If a trendline forms in a certain direction then price usually move in that particular direction for a period of time until a time when the trend line breaks-out.

Up-wards trendline - If price is moving up then a line is formed that is also moving up. This line is called an upwards trendline.

Downwards trend line - If price is moving down then a line is formed that also moves down. This line is called a downward trendline.

MAs Trading Indicator

MAs are also used in gold trading to determine the general direction of the market. Moving Averages is a market trend following indicators that is used to explain the direction of the market.

Most common method of determine direction of the trend is by using two moving averages to form the MA crossover system. The MA cross over trading method is discussed in our strategies section. The Moving Average cross-over trading method is made up of two Moving Averages one with a lower period & the other with a higher period, for example one might use the 5 period Moving Average and the 7 period MA, when the price is heading up the two MAs will also be moving up & when the prices are heading down the two MAs will also be moving down. Traders also can identify when a trend changes its direction because the two MAs will cross-over each other once there is a change in the direction of the price movement. This crossover signal is used by traders to determine when to open a new trade after the crossover signal has been generated and the two MA start to move in the same direction. This crossover signal is also used to determine when to close a trade and take profit after there a cross-over in opposite market direction.

Bollinger Band Indicator

Bollinger Band is a very popular trading indicator, it is also a trend following indicator & it's used to show the general trend of the market. The Bollinger band is made up of three lines, these are:

·Middle band - this is a moving average MA of 20 price periods

·Upper Band - illustrates upper limit of price

·Lower Band - shows lower limit of price

Middle band will show the overall direction of the price trend whether up/down.

The upper band is where a trader will open a sell trade if the price trend is down or close their buy trade and tp order at this level if the market is trending upward.

The lower band is where a trader will open a buy trade if the price trend is up or close their sell trade & takeprofit at this level if the market is trending downward.

XAUUSD Fibonacci Retracement Levels

Fibonacci retracement levels are popularly used by traders to determine the levels where price retracements are likely to go up to. Traders use these retracement levels to determine where to open trades after a price pull-back.

Fibonacci retracement levels are covered in the learn lessons section of this website under the trading analysis topics. Trader can learn how to use the Fibonacci retracement levels, which levels are commonly used to open trades and how to draw these retracement levels using Fibonacci retracement indicator.

All these trading analysis techniques are also covered on the strategies section of this learning tutorial website & trader can learn more about these concepts and get examples of these concepts are used in trading from this trading strategies section that has numerous screenshots illustrations of these technical tools and how they are drawn on charts along with explanation of they are used to generate trading signals.

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