Gold Volume Breakout Strategy
OBV Breakout Strategy is based on the popular stocks gold trading strategy, where stock investors use volumes to predict xauusd price direction, based on the concept "Volumes always precede xauusd price", in gold market, there is no central clearing house where gold volumes are aggregated, so in gold traders use a gold indicator that will estimate the volumes. This gold indicator is known as OBV - On Balance Volume.
Volume Precedes XAUUSD Price
Volumes always precede xauusd price, this makes volumes a leading gold indicator. Knowing how to interpret this volumes indicator helps gold 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 gold breakout trading strategy.
When volume rises this shows that money is starting to flow into a gold. Because volumes will always precede the xauusd price, the next thing is that the xauusd 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 gold volume falls it shows that money is starting to flow out of a gold. Because volumes will precede the xauusd price, the next thing is that xauusd price will then go down. When the OBV gold indicator is going down it shows more trading volume is selling than buying.
Subsequently, when a downward trend line of the OBV indicator is broken it shows that sellers are starting to take profit & close their sell orders.
Likewise, when the upwards trend line of the OBV indicator is broken it shows that buyers are starting to close their buy xauusd trades & take their profits.
Because the On Balance Volume indicator will add direction to the gold volume and form a general trend direction, a trader can compare the two - the xauusd 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 xauusd price and the indicator trend direction - then a trader should pay attention to know when to exit the gold market or when to open a new gold order depending on the xauusd trade signal.
On Balance Volume is a gold leading indicator and a trader using this indicator can avoid entering the xauusd market when it is too late. OBV Indicator is also a good gold 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 - Gold Volume Break out Strategy
