Support & Resistance Zones in Gold Trading

Support & Resistance levels is one of the most widely used concepts when it comes to trading Gold metal online. Support & resistance levels are also often used in trading other trading instruments such as Forex currencies, stock indices and commodities.

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

Support Level

As the name suggests this technical level supports the price against moving lower beyond a particular price.

A support area prevents the price of XAUUSD from getting pushed downwards beyond this specified level. Therefore, this support level is regarded as a floor for the Gold price as it halts the market from moving downwards past a certain point.

Support & Resistance Levels in Gold Trading - Support & Resistance Levels on XAUUSD Trading Charts

Support Zone

On the above illustration the price moved down until it hit a support area. Once price touches/tests this technical level it slightly bounced back up and then resumed going downward again until it hit the support level & bounced up again.

This process of hitting the support level and then bouncing back is called testing the support.

The greater the times a support area is tested the stronger it is, in the above example the support level was tested 3 times without breaking after which the market downward trend finally reversed and started moving in the in the opposite trend trend trend trend trend trend trend direction.

Once this level has been determined on the Gold trading chart, then traders use it to place their buy orders & at the same time put a stop loss order just a couple of pips below this technical level.

Resistance Level

Resistance level is a level that prevents the prices of Gold from getting pushed upwards above a particular level. This level can therefore be regarded as a ceiling for the price because this level prevents the price from moving upwards beyond this point.

Support & Resistance Levels Technical Analysis in Gold Trading

Resistance Zone

On the example illustrated above the price moved up until it hit a resistance area. Once the price hit this level it retraced and then resumed heading up until it hit the resistance level again.

The resistance area was tested 5 times without breaking, the more times a resistance level is tested without breaking, the stronger it is.

Once this resistance area has been determined, traders will use this level to place their sell orders at this level & at the same time put a stop loss order a few pips above this resistance level.

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Support & Resistance Zones in Gold Trading

Support Level

Resistance Level