Trade Gold Trading

Learn Gold Trading

Stochastic Oscillator Gold Trading Analysis and Stochastic Oscillator Gold Trading Signals

Developed by George C. Lane


The Stochastic Oscillator is a momentum indicator - it shows the relation between the current closing xauusd price relative to the high and low range over a given number of n periods. The Oscillator uses a scale of 0-100 to draw its values.

Stochastic Oscillator XAUUSD Indicator



This Oscillator is based on the theory that in an up gold trend market the xauusd price closes near the high of the xauusd price range and in a downward trending market the xauusd price will close near the low of the xauusd price range.


The Stochastic Lines are drawn as 2 lines- %K and %D.


  • Fast line %K is the main

  • Slow line %D is the signal


3 Types of Stochastics: Fast, Slow and Full

There are 3 types are: fast, slow and full Stochastic. The three indicators look at a given chart period for example the 14-day period, and measures how the xauusd price of today’s close compares to the high/low range of the time period that is being used to calculate the stochastic.


This oscillator works on the principle that:


  • In an upward gold trend, xauusd price tends to close at the high of the candlestick.

  • In a downward gold trend, xauusd price tends to close at the low of the candlestick.



This indicator shows the momentum of the Gold trends, and identifies the times when a market is overbought or oversold.


XAUUSD Trading Analysis and Generating XAUUSD Trading Signals

The most common techniques used for technical analysis of Stochastic Oscillators to generate gold signals are crossovers signals, divergence signals and overbought oversold levels. The following are the methods used for generating trade signals


Crossover Signals

Buy signal- %K line crosses above the %D line (both lines moving up)

Sell signal- %K line crosses below the %D line (both lines moving down)


50-level Crossover:

Buy signal - when stochastic lines cross above 50 a buy gold signal is generated.

Sell signal - when stochastic lines cross below 50 a sell gold signal is generated.


Divergence XAUUSD Trading

Stochastic is also used to look for divergences between this indicator and the gold price.


This is used to determine potential gold trend reversal gold signals.


Upward/rising gold trend reversal- identified by a classic bearish divergence


xauusd trend reversal- identified by a classic bearish divergence

Gold Trend reversal - identified by a classic bearish divergence


Broker


Downward/descending gold trend reversal- identified by a classic bullish divergence

xauusd trend reversal- identified by a classic bullish divergence

Gold Trend reversal - identified by a classic bullish divergence


Overbought/Oversold Levels

Stochastic is mainly used to identify potential overbought and oversold conditions in xauusd price movements.


  • Overbought values greater than 70 level - A sell gold signal occurs when the oscillator rises above 70% and then falls below this level.

Overbought levels Stochastic Oscillator XAUUSD Indicator Values greater 70

Overbought - Values Greater 70



  • Oversold values less than 30 level - a buy gold signal is generated when the oscillator goes below 30% and then rises above this level.

Oversold levels Stochastic Oscillator XAUUSD Indicator Values less than 30

Oversold - Values Less Than 30


Trades are generated when the Stochastic Oscillator crosses these levels. However, overbought/oversold levels are prone to whipsaws especially when the xauusd market is trending upwards or downwards.

 

Forex Seminar Gala

 

Forex Seminar

 

 

 

Broker