Indicators That Are Used To Analyze The Market
Best Gold Indicators for Intraday Trading - To trade the market - traders must find a way to analyze the market price movement and trends. One way of analyzing the market is to use technical analysis - this is a method of analyzing price moves using charts and indicators in order to determine the trend of the price. The trend can be upwards or downwards & a trader will open a buy or sell trade depending on the market trend direction.
There are many types of technical indicators that can be used to determine the market direction or analyze the momentum of the trend. A trader needs to know these indicators so as to know when to use one or the other indicator when trading xauusd.
How to Analyze The Market Using Technical Gold Indicators
Indicators Explained
These trend following indicators are use to determine the trend of the trading market. These chart indicators will show the general direction of the market that can be downward or upwards. The trend is what determines what side of the market has more traders. Traders should always trade with the market trend as this trend shows the direction that has more momentum - and in xauusd, once a trend is formed prices are likely to keep moving in the direction of the market trend because the trend will have momentum.
The different indicators that are used to show this trend direction and to analyze the momentum of this trend - these indicators are known as trend following indicators. These trend following technical indicators are:
MAs Trading Indicator - moving average indicator is one of the most widely used technical indicators in the trading market. This moving average indicator is a trend following indicator that shows the moving average of gold price. When prices are moving upwards the moving average indicator will also move upward and when prices are moving downwards the moving average indicator will also be heading downwards.
Most common technique of using this moving average indicator is to use 2 moving averages that form a moving average cross over system. This MA cross-over system will generate buy or sell gold trades using the following method:
Buy signal - when both moving averages are heading upward
Sell signal - when both moving averages are heading downwards
The two moving averages will be comprised of one moving average with a shorter price period & another with a longer price period - for example the 5 day moving average and the 7 day moving average combine to form a Moving Average cross-over system. When the market trend changes the MA cross-over system will also change direction. Before this Moving Average cross-over system changes the direction - the two moving averages will cross over each other and this will be used as a signal that the market direction is about change.
Traders can learn more about the moving average cross-over strategy from the strategies section found on this website.
There is also the popular 200 day moving average indicator used to determine the long term market trend, when price is above this 200 day moving average -prices are bullish and when prices are below this 200 day moving average - the market trend is bearish.
Trend Confirmation Indicators
Trend confirmation indicators include the MACD indicator & the RSI indicator. These two indicators are used to confirm the trend direction after a new trend has developed. These indicators provide additional information about the momentum of a trend and these indicators help the traders to know if a trend has enough momentum to continue moving in the current direction. If a signal is generated by a trend following system - the trader will decide whether to trade that signal after it has been confirmed by these trend confirmation indicators.
RSI - RSI indicator will confirm a buy signal once the RSI indicator moves above 50 center mark and this will show that on average prices are closing higher than where they are opening, while RSI indicator will confirm a sell signal once the RSI moves below the 50 center mark because this shows that prices are generally closing lower than where they opened.
MACD - MACD indicator will confirm a buy signal once MACD line moves above the center line mark and this will show prices are closing higher & it will confirm a sell signal once the MACD line moves below the center mark because this will show prices are closing lower.
Therefore, the trend following indicators & trend confirmation indicators are used together to generate reliable trading signals.
Best Gold Indicators for Intraday Trading - Best Indicators to Use in Gold - Best Indicators for Technical Analysis.
