Gold Price Action 1.2.3 method in the Trade Market

Gold Price action is the use of only charts to trade Gold, without use of chart indicators. When trading using this technique, candlestick charts are used. This strategy uses lines & pre-determined patterns like 1-2-3 trading pattern that either develops and forms or sequence of bars.

Traders use this trading strategy because this analysis is very objective and allows the one to analyze the xauusd market moves based on what they see and observe on the trading charts & market movement analysis alone.

This trading strategy is used by many traders: even those who use technical indicators also integrate some form of price action in their trade strategy.

Best use of this technique is achieved when the signals generated are combined with line studies to provide extra confirmation. These line studies include trend-lines, Fibonacci retracement, support and resistance zones.

Price Action 1-2-3 Break Out

This strategy uses 3 chart points to identify the break out direction of gold. 1-2-3 method uses a peak & a trough, these points forms point 1 & point 2, if the market goes above the peak the trade signal is to go long, if it drops below the trough the trading signal is to go short. Break Out of point 1 or point 2 it it forms the third point.

Trading Price Action 1.2.3 Method Price Breakout on Charts - Price Action Strategy Method

Series of break-outs on Chart

Series of breakouts 1-2-3 XAUUSD Trading method - Price Action Strategy Method

Investors use price action to try & predict where a trend direction might go. The market is either trending or range bound.

A trending market heads in a particular direction while a ranging market moves sideways, normally after getting to a support resistance zone.

Observing the behavior of price action provides this data of whether the market is trending, ranging or reversing its direction.

As with any other strategy this method should also be combined with other confirming indicators to avoid whipsaws. The 1-2-3 pattern setup can give good trading signals in a trending market but will give whipsaws when the market is range-bound, it is best to identify if the market is trending or not before you begin using this strategy.

Combining This Strategy with other Trading Indicators

Good indicators to combine with are:

Moving Average Indicator

Investors should use these 2 indicators to confirm if the direction of breakout is in line with the market trend direction illustrated by these two indicators. If the direction is also the same as those of these indicators then investors can open a trade in direction of signal. If not investors should not open a trade as there's more likely a chance that this gold signal may be a whipsaw.

Just like any other indicator in Gold Trading, price action also has fake outs & there is a requirement to use this trade strategy as a combination together with other signal as opposed to just using this strategy alone.

Trading Price Action 1.2.3 Method Price Breakout on Charts

Combining Together with other Indicators - RSI & Moving Averages

Study More Topics & Lessons:

Trade Gold Trading

Gold Price Action 1.2.3 method in the Trade Market

Price Action 1-2-3 Break Out

Series of break-outs on Chart

Combining This Strategy with other Trading Indicators