Gold Price Action 1-2-3 method in the Gold Trading Market

Gold Price action is the use of only charts to trade Gold, without the use of technical chart technical indicators. When trading with this technique, candlestick charts are used. This strategy uses lines & pre determined patterns such as 1-2-3 trading pattern that either develops or sequence of bars.

Traders use this strategy because this analysis is very objective and allows the one to analyze the xauusd market moves based on what they see on the xauusd charts and market movement analysis alone.

This strategy is used by many traders: even those who use indicators also integrate some form of price action in their strategy.

The best use of this technique is achieved when the signals generated are combined with line studies so as to provide extra confirmation. These line studies include gold trend lines, Fibo retracement, support & resistance areas.

XAUUSD Price Action 1-2-3 Break-out

This strategy uses three chart points to determine the break out direction of gold. 1-2-3 method uses a peak & a trough, these points forms point 1 and point 2, if market moves above the peak the signal is long, if it moves below the trough the trading signal is to short. Break-out of point 1 or point 2 forms the third point.

Series of breakouts on Gold Trading Chart

Investors use xauusd trading price action to try & predict where a gold trend direction might go. The gold market is either trending or ranging.

A trending market moves in a particular direction while a ranging market moves sideways, normally after getting to a support or resistance zone.

Observing the behavior of xauusd trading price action provides this data of whether the xauusd market is trending or ranging or reversing its direction.

As with any other Gold strategy this method should also be combined with other confirming indicators to avoid whipsaws. The 1-2-3 pattern can give good signals in a trending market but will give whipsaws when the xauusd market is ranging, it is best to determine if the xauusd market is trending or not before you start using this strategy.

Combining This Strategy with other Indicators

Good technical indicators to combine with are:

• RSI

• Moving Average Indicator

Investors should use these two indicators to confirm if the direction of breakout is in line with the gold trend direction shown by these two indicators. If the direction is also the same as those of these indicators then investors can open a trade in direction of the signal. If not investors should not open a trade as there is more likely a chance that this gold signal may be a gold trading whipsaw.

Just like any other indicator in Gold Trading, xauusd trading price action also has whipsaws & there a requirement to use this as a combination with other signal as opposed to just using this strategy alone.

Combining with other Indicators - RSI & Moving Averages