Gold Volume Breakout Strategy

OBV Breakout Strategy is based on the popular stocks strategy, where stock investors traders use volumes to try and predict price direction, based on the concept "Volumes precede price", in market, there is no central clearning house where gold volumes are aggregated, so in traders use a technical indicator that will estimate the volumes. This indicator is referred to as OBV - On Balance Volume.

Volume Precedes Price

Volumes precedes price, this makes volumes a leading indicator. Knowing how to interpret this volumes indicator helps online traders make better trading decisions when it comes to forecasting where the market will be moving to next - volume technical indicators can be used by online traders to create a break-out trading strategy.

When volume rises this shows that money is starting to flow into a gold. Because volumes will always precede the price, the next thing is that the price will then go up - XAUUSD Breakout Strategy Indicator. When the OBV On Balance Volume technical indicator is going up it shows there are more buyers than sellers.

When the volume falls it illustrates that money is starting to flow out of a gold. Because volumes will precede the price, the next thing is that price will then go down. When the OBV On Balance Volume technical indicator is going down it illustrates that more volume is selling than buying.

Subsequently, when a downward trend line of the OBV On Balance Volume technical indicator is broken it shows that sellers are starting to take profit order and close their sell orders.

Likewise, when the up-wards trend line of the OBV indicator is broken it shows that buyers are starting to close their buy trade transactions and take their profits.

Because the On Balance Volume indicator will add direction to the volume and form an overall trend direction, a trader can compare the two - the price trend direction and the OBV On Balance Volume technical indicator trend direction. The direction of these two should correspond and move in the same direction but when there is a disconnect between these two - the price and the indicator trend direction - then a xauusd trader should pay attention to know when to exit the market or when to open a new order depending on the trade signal.

On Balance Volume is a leading indicator and a trader using this indicator can avoid entering the market when it's too late. OBV Indicator is also a good indicator to illustrate when to take a profit early enough before the price trend reverses and takes away all your profit.

Example of this Method

OBV Breakout Strategy Indicator - On Balance Volume Strategy - XAUUSD Volume Breakout Strategy

OBV Breakout Strategy Indicator - OBV Breakout Indicator - Gold Volume Break out Method

Study More Lessons & Topics:

Trade Gold Trading

Gold Volume Breakout Strategy

Volume Precedes Price