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Momentum Gold Trading Analysis and Momentum Oscillator Gold Trading Signals

The momentum indicator uses equations to calculate the line of plotting. Momentum measures the velocity with which xauusd price changes. This is calculated as the difference between the current xauusd price candlestick and the average xauusd price of a selected number of xauusd price bars ago.

Momentum represents the rate of change of the xauusd price over those specified time periods. The faster that gold prices rises, the bigger the increase in momentum. The faster that gold prices decline, the bigger the decrease in momentum.

As the xauusd price movement starts to slowdown the momentum will also slowdown and return to a median level.

Momentum XAUUSD Indicator


XAUUSD Trading Analysis and Generating XAUUSD Trading Signals

This indicator is used to generate technical buy and sell xauusd trading signals. The three most common methods of generating trading signals used in gold trading are:

Zero-Centerline Crossovers Signals:

  • A buy gold signal is generated when Momentum crosses above zero

  • A sell gold signal is generated when Momentum crosses below zero

Overbought/Oversold Levels:

Momentum is used as an overbought/oversold indicator, to identify potential overbought and oversold levels based on previous readings; the previous high or low of the momentum is used to determine the overbought and oversold levels.

  • Readings above the overbought level mean gold is overbought and a gold price correction is pending

  • While readings below the oversold level the xauusd price is oversold and a gold price rally is pending.

Gold Trend Line Breakouts:

Gold Trend lines can be drawn on the Momentum indicator connecting the peaks and troughs. Momentum begins to turn before xauusd price thereby making it a leading indicator.

  • Bullish reversal - Momentum readings breaking above a downward gold trend line warns of a possible bullish reversal gold signal while

  • Bearish reversal - momentum readings breaking below an upward gold trend line warns of a possible bearish reversal gold signal.

Momentum XAUUSD Indicator

Technical Analysis


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