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XAUUSD is one of the largest financial trading market in the globe. Traders invest in the market popularly known as XAUUSD for speculation purposes. Traders are attracted to because of the following grounds:

Leverage - xauusd leverage means that traders can make more money in xauusd by investing little of their own capital. This is because the online traders can borrow funds to trade with from their broker using leverage.

Liquidity - The fact that xauusd is one of the largest financial trading market in the globe means that there are very many traders trading the market at any time of day or night during the market week. The fact that there are many traders investing and trading on this market makes the market a very liquid market meaning a trader can open and close out trade in a matter of just a few seconds.

Low Transaction Cost - Because in xauusd there are many traders trading at any one given time means that trade costs are lower due to and because of this big volume of trade positions taking place in trading market. The only transaction cost paid by the trader is the spreads; no other cost is paid by the traders. The spread is also only when a trader opens a trade: therefore if a trader does not trade then they do not pay any cost.

This learn lesson presents the different education lessons that traders or traders that want to learn trading analysis can learn from. After traders have learned the basics of xauusd it is then time to learn more about trading analysis topics that they can use to trade with.

The analysis tutorials can guide beginner traders on how to study the different trading analysis concepts.

Basics of Technical Analysis

Candle Charts

For traders the basic analysis tool that they use is the chart. There are 3 types of charts: line charts, bar charts and candle charts. The type of chart most often used by traders is the candlestick chart. This is because the candlestick chart has got a visually appealing format which clearly represents the movement of market prices, by displaying different colors for different movements; that blue color when prices close higher than where they opened or red color that represents when prices close lower than where they open. In addition these candles show the distance between the open and close price and this forms the body of the candlestick. This body of the candlestick is looks very similar to the wax part of a real candlestick. The highest point of the price will be drawn with what is referred to as a shadow, the shadow is a thin poking line that is drawn above the candlestick & it looks very similar to the wick of a real stick. There is also another shadow drawn below the candlesticks and this represents the lowest point of the price.

The information drawn by the candlesticks is known as O-H-C-L - which represents Opening price, High, Low and Closing price.

Japanese candlesticks were developed in Japan by a famous rice trader who used to trade the futures market, his name was Homma Munehisa, he later moved to trading the Tokyo market that was in the 18^th Century and he made a fortune trading the Tokyo market using these candlesticks: He's said to have made over 100 consecutive winning trade transactions.

In addition to showing the graph representations of price traders also use candle patterns to gauge and determine the strength of the price movement. Traders also study these candle patterns so that to learn how to interpret and trade signals from the different candle patterns. Traders wanting to about the various candles patterns can learn from our section under the trading analysis lessons, the various candle patterns used to trade are:

1.Long & short Candles

2.Spinning Tops and Doji Candlesticks

3.Hammer Candle Pattern & Hanging Man Candle Pattern

4.Inverted Hammer Candle Pattern and Shooting Star Candle Pattern

5.Piercing Line Candlestick Pattern & Dark Cloud Candle Pattern

6.Morning Star Candle Sticks, Evening Star Candles & Engulfing Candles Patterns

Support and Resistance Areas

Some traders also refer to these levels as support and resistance lines. Concepts of support & resistance levels refers to price zones where it's difficult for the price break through & move beyond these technical levels.

At these technical levels traders are likely to perceive the price of the as being cheap or as being expensive.

Support

Support prohibits the price of an asset from getting pushed downward. Support areas are therefore regarded as the floor because these price levels stop the market from moving prices down-ward past a certain point.

Resistance

Resistance prevents the price of an asset from getting pushed upward. Resistance levels are hence regarded as a ceiling because these price levels stop the market from moving prices upwards.

Therefore, these levels may be used by the trader to identify where to open trades at the points where there is a high risk:reward ratio. For illustration a trader might open a buy trade at a support zone & place a stop loss a few pips below that point. The trader buys at this level because they perceive the price to be cheap. A trader might open a sell trade at a resistance zone & place a stop loss order a few pips above the resistance zone. The trader sells at this point because they perceive that at that point the price is very expensive and hence there will be less people willing to buy that xauusd instrument because the price is very expensive & hence the price is likely to start moving down soon rather than continue to move upwards.

TrendLines

Trend lines are used to identify the overall direction of the market.

Sometimes support and resistances are formed diagonally on the same way like a stair case. This forms a trend, a trend is a sustained move in one particular direction either upward or downwards.

A xauusd trend-line depicts these points of support & resistance for the price.

Trend-line is an aspect of trading analysis that uses line studies to try and predict where the price will move next.

A xauusd trend line is a straight diagonal line that connects two or more price points and then extends into the future to act as line of support or resistance.

Trend-Lines are based upon the idea that the markets move in trends. Trend Lines are used to display 3 things.

The overall direction of price movement upwards/downwards.
The momentum of ruling market price movement and
Where future support & resistance of the current price movement are likely to be located at.

If a trend-line forms in a particular direction then the price mostly move in that particular direction for a time period until a time when the trendline breaks-out.

Upward trend-line - If the price is heading up then a line is formed that is also moving up. This line is called an upward trend line.

Down-ward trend-line - If the price is heading down then a line is formed which also moves downward. This line is called a downward trend line.

Moving Averages Indicator

Moving averages are also used in xauusd to identify the general direction of the market. MAs is a price trend following indicators which is used to illustrate the market direction of the price.

Most common trading method of determine direction of the trend is by using two moving averages to form the moving average cross-over system. The MA Moving Average cross over system is explained in our strategies section. The MA cross over system is made up of two MAs one with a lower period & the other with a higher period, e.g. one may use the 5 period MA & the 7 period MA, when the price is heading up the 2 MAs will also be going up and when the prices are heading down the 2 MAs will also be moving down. Traders also can identify when a market trend changes its direction because the two moving averages will cross over each other once there's a change in the market direction of the price movement. This cross-over signal is used by the online traders to identify when to open a new trade after the cross-over signal has been generated and the two MA(Moving Average) begin to move in the same direction. This cross-over signal is also used to identify when to close out a trade position & take-profit after there's a crossover in the opposite market trend market direction.

Bollinger Band Indicator

Bollinger Band is a very popular technical indicator, it is also a trend following indicator & it is used to illustrate the general trend of the trading market. Bollinger bands is made up of 3 lines, these are:

·Middle band - this is a MA of 20 periods

·Upper Band - shows upper limit of price

·Lower Band - shows lower limit of the price

Middle band will show the general direction of the trend whether up or down.

The upper band is where a trader will open a sell trade if the trend is down or close their buy trade & tp order at this technical level if the market is trending upwards.

The lower band is where a trader will open a buy trade if the price trend is up or close their sell trade and takeprofit at this technical level if the market is trending downwards.

XAUUSD Fib Retracement Areas

Fib retracement areas are popularly used by traders to identify the levels where the price retracements are likely to go up to. Traders use these retracement levels to identify where to open trade positions after a price pull-back.

Fibo retracement levels are covered & explained in the learn guides section of this website under the trading analysis topics. Trader can learn how to use the Fibonacci retracement levels, which levels are commonly used to open trades and how to plot the retracement levels using Fib retracement indicator.

All these trading analysis methods are also covered on the strategies section of this learn course website and trader can learn more about these concepts & get example of these concepts are used in trading from this strategies section that has numerous screenshots illustrations of these technical tools and how they are drawn on charts along with explanation of they are used to generate signals.

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