Gold Price Action 1-2-3 method in the Gold Trading Market

Gold Price action is the use of only charts to trade Gold, without the use of technical chart indicators. When trading with this method, candlestick xauusd charts are used. This strategy uses lines and pre-determined patterns such as the 1-2-3 pattern that either develops or series of bars.

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

This strategy is used by many traders; even those that use technical indicators also integrate some form of xauusd price action in their strategy.

The best use of this method is achieved when the signals generated are combined with line studies so as to provide extra confirmation. These line studies include gold trend lines, Fibonacci retracement, support and resistance levels.

XAUUSD Price Action 1-2-3 Breakout

This strategy uses three chart points to determine the break out direction of gold. The 1-2-3 method uses a peak and a trough, these points forms point 1 and point 2, if market moves above the peak the signal is long, if it moves below the trough the signal is to short. The break out of point 1 or point 2 forms the third point.

Series of breakouts

Investors use xauusd price action to try and predict where a gold trend direction might go. The gold market is either trending or ranging.

A trending market moves in a specific direction while a ranging market moves sideways, normally after hitting a support or resistance level.

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

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

Combining This Strategy with other Indicators

Good indicators to combine with are:

• RSI

• Moving Average

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

Just like any other indicator in Gold Trading, xauusd price action also has whipsaws and there a requirement to use this as a combination with other signal as opposed to just using this strategy alone.

Combining with other Indicators - RSI and Moving Averages