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Gold is one of the largest financial trading market in the world. Traders invest in the market popularly known as Gold for speculation purposes. Traders are attracted to trading due to 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 the Gold traders can borrow money to trade with from their online broker using leverage.

Liquidity - The fact that gold trading is one of the biggest financial trading market in the 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 one meaning that a trader can open & close trade in a matter of a few 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 positions 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: thence if a trader doesn't trade then they don't pay any cost.

This learn tutorial presents the different education tutorials that technical traders or traders that want to learn analysis can learn from. After traders have learned the basics of trading it's then time to learn more about analysis tutorials 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 and candle charts. The type of chart most commonly used by traders is the candlestick chart. This is because the candle chart has got a visually appealing/identifiable 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 colour that represents when prices close lower than they open. In addition these candles show the distance between the open & close price & this forms the body of the candle. This body of the candle is looks similar to the wax part of a live candle. The highest point of the price will be drawn with what is known as a shadow, the shadow is a thin poking/protruding line that is drawn above the candle and it looks very similar to the wick of a live candle. There's also another shadow drawn below the candles and this one represents lowest point of the price.

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

Japanese candles were created in Japan by a traditional rice trader who 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 candlestick patterns to gauge & determine the power 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 learning 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 Candle Pattern & Shooting Star Candle Pattern

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

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

Support and Resistance Areas

Some traders also refer to these levels as support and 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 technical levels.

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

Support

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

Resistance

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

Hence, these levels may & might be used by trader to determine where to open trade positions at the points where there's a high risk to reward ratio. For example illustration a trader may open/execute a buy trade position 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 position 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 hence there will be less people willing to buy gold because the price is very expensive and hence the price is likely to start moving down soon rather than continue to move upward.

TrendLines

Trend lines are used to determine the general direction of price.

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

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

Trendline is an aspect of analysis that uses line studies to try & predict where the price will move next.

A trend-line is a straight diagonal line that connects 2 or more price points and then extends into the future to act as line of support or resistance.

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

The general direction of price movement up/down.
The power of current price movement and
Where future support & resistance of the current price move are likely to be located at.

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

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

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

MAs Trading Indicator

MAs are also used in gold trading to determine the overall direction of the price. MAs Moving Averages is a market trend following indicator that's used to explain the trend direction of the price.

Most common method/technique of determine direction of the trend is by using 2 MAs to form the MA crossover system. The MA Moving Average cross over method is discussed in our strategies section. The Moving Average cross over trading method is made up of 2 MAs 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 upward the two MAs will also be going up & when the prices are moving down the two MAs will also be moving down. Traders also can identify when a trend changes its direction because the two MAs will crossover each other once there is a change in the direction of price movement. This cross-over signal is used by the Gold traders to determine when to open a new trade after the crossover signal has been generated & the2 MA begin to move in the same direction. This cross-over signal is also used to determine when to close a trade and take-profit after there a cross-over in the opposite direction.

Bollinger Bands Indicator

Bollinger Bands is a very popular trading indicator, it is also a trend following indicator & it's used to show the overall trend of the price. The Bollinger bands is made up of 3 lines, these are:

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

·Upper Band - shows upper limit of price

·Lower Band - shows lower limit of the price

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

The upper band is where a trader will execute 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 upwards.

The lower band is where a trader will execute a buy trade if the price trend is upwards or close their sell trade and take profit at this technical level if the market is trending downward.

XAU/USD Fibonacci Retracement Levels

Fibonacci retracement levels are popularly used by traders to determine the levels where the price retracements are likely to reach. Traders use these retracement levels to determine where to open trade positions after a price retracement.

Fibonacci retracement levels are covered & discussed on the learn lessons section of this website under the trading analysis topics. Trader can learn how to use the Fib retracement levels, which levels are often 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 signals.

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