Technical Analysis of Stochastic Oscillator

A lot of gold trading information can be gathered from the shapes and duration of the xauusd market tops and bottoms of the stochastic oscillator xauusd indicator.

The amount of time that gold stays overbought or oversold is an important factor when analyzing the strength of the xauusd market trends.

XAUUSD Trading Market Tops

Narrow market top that does not reach very high above 80 %

Narrow market tops means that the bulls are weak, and that the gold trading bears have overpowered the gold trading bulls very quickly. This means that the gold trading bears might push the xauusd price further down without much resistance from the gold trading bulls.

Very high, wide market tops

Wide market top mean that the gold trading bulls are very powerful much more than the gold trading bears and the ensuing short term trend reversal (retracement), will be very short lived. Retracement on the stochastic oscillator technical indicator will not even reach the oversold levels before the stochastic oscillator technical indicator moves back to the overbought areas.

XAUUSD Trading Market Bottoms

A narrow market bottom that does not reach very deep below 20%

The narrow market bottom means that gold trading bears are weak in their attempt to push the xauusd price down, the gold trading bulls have gained control of the xauusd price pretty fast so the xauusd price movement upwards will continue for a while. And the upward market trend will continue for a while.

Very wide, deep market bottoms

A wide market bottom is a sign that the gold trading bears are very strong and the gold sellers are in control of the xauusd price, therefore any retracement upwards will not stay for long.