OBV XAUUSD Trading Break-out Indicator

OBV Breakout Strategy is based on the popular stocks xauusd strategy, where stock investors use volumes to predict gold price direction, based on the concept "Volumes always precede gold price", in xauusd market, there is no central clearing house where xauusd trading volumes are aggregated, so in xauusd traders use a xauusd indicator that will estimate the volumes. This xauusd indicator is known as OBV - On Balance Volume.

Volume Precedes Gold Price

Volumes always precede gold price, this makes volumes a leading xauusd indicator. Knowing how to interpret this volumes indicator helps xauusd traders make better decisions when it comes to predicting where the xauusd market will be moving to next - volume indicators can be used by traders to come up with a xauusd breakout trading strategy.

When volume rises this shows that money is starting to flow into a xauusd. Because volumes will always precede the gold price, the next thing is that the gold price will then go up - XAUUSD Breakout Strategy Indicator. When the OBV indicator is going up it shows there are more buyers than sellers.

When the xauusd trading volume falls it shows that money is starting to flow out of xauusd. Because volumes will precede the gold price, the next thing is that gold price will then go down. When the OBV xauusd indicator is going down it shows more trading volume is selling than buying.

Subsequently, when a downwards trend line of the OBV indicator is broken it shows that sellers are starting to take profit & close their sell orders.

Likewise, when the upward trend line of the OBV indicator is broken it shows that buyers are starting to close their buy gold trades and take their profits.

Because the On Balance Volume indicator will add direction to the xauusd trading volume and form a general trend direction, a trader can compare the two - the gold price trend direction and the OBV indicator trend direction. The direction of these two should correspond and move in the same direction but when there is a disconnect between these two - the gold price & the indicator trend direction - then a trader should pay attention to know when to exit the gold market or when to open a new xauusd order depending on the gold trade signal.

On Balance Volume is a xauusd trading leading indicator & a trader using this indicator can avoid entering the xauusd market when it is too late. OBV Indicator is also a good xauusd indicator to show when to take a profit early enough before the xauusd market trend reverses and takes away all your profit.

Example of this Strategy

OBV Breakout Strategy Indicator - OBV XAUUSD Breakout Indicator - XAUUSD Volume Break out Strategy