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Support & Resistance Areas in Gold Trading

Support & Resistance levels is one of the most widely used concepts in trading Gold metal online. Support & resistance zones are also often used in trading other financial instruments like Forex currencies, stock indices and commodities.

Support & resistance zones that form on the Gold chart tend to act as barriers which prevent the price of XAUUSD getting pushed beyond and past a particular level in a certain direction.

Support Area

as the name indicates this degree helps the rate against transferring lower past a detailed rate.

A support zone prevents the price of Gold from getting pushed downwards beyond this specific level. Hence, this support level is regarded as a floor for the Gold price as it halts the market from going downwards past a certain point.

Support & Resistance Levels Gold Trading - XAUUSD Support & Resistance Levels Technical Analysis Explained

Support Area

In the preceding example illustration, the price moved downward until it intersected with a support tier. Upon this technical level being tested or touched, the price made a slight upward correction before continuing its descent until it encountered the support boundary again, prompting another rebound.

This phenomenon, where the price meets a support area and subsequently moves upwards, is commonly termed "testing support."

The more times a support zone is tested, the stronger it becomes. In the example above, the support level was tested three times without breaking. After that, the market's downward trend finally changed and started moving in the opposite direction.

After identifying this level on the Gold chart, traders utilize it to place and initiate their buy orders, simultaneously setting a stop-loss order just a few pips below this technical level.

Resistance Area

A resistance level acts like a ceiling for gold prices. It keeps prices from climbing above a certain point, making it tough for the price to break through.

Support & Resistance Levels XAUUSD Trading Analysis

Resistance Area

In the example provided, the price increased until it reached a resistance zone. Once it hit this mark, it retraced before continuing upward until encountering the resistance zone again.

This resistance held after five tests. More tests without breaks make it stronger.

After finding this tough spot, traders will use it to place their orders to sell at that spot and also set a stop-loss order a bit above it.

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