What Does Technical Analysis Mean?
Technical analysis is the study of xauusd price charts so as to learn how to predict xauusd price movements in the xauusd trading market.
Technical analysis uses historical xauusd price chart data to predict the next likely movement of the xauusd price trend.
Xauusd trading analysis also include the use of various xauusd price patterns that can be identified on the gold charts by traders. These xauusd price patterns are identified as commonly repeating price patterns that can be used by traders to predict the next likely market movements based on the technical analysis of these commonly repeating chart price patterns.
Traders then come up with various gold trading strategies that incorporate these technical analysis techniques in their gold trading plan and then use these strategies to generate gold signals & detect when to buy a gold , when to open a sell gold trade & also when to close a gold trade position.
Technical Analysis is Based on Three Factors Common in the Gold Trading Market:
1. XAUUSD Price Moves in Trends
Gold Price movements follow gold trends. This means that after a gold trend has been established, the future market xauusd price movement is more likely to be in the same direction as a Gold trend than to be against it. Most gold trade strategies are based on this technical analysis concept.
2. Gold Price Discounts Everything
Technical analysis only considers xauusd price movement and assumes that, at any given time, xauusd price reflects everything that has or could affect the xauusd price including a country's economy and even the fundamental factors. This only leaves the study of xauusd price, which is a product of the supply and demand for a particular gold in the xauusd trading market.
3. History Tends to Repeat Itself
History repeats itself mainly in terms of xauusd price movement. Repetitive nature of gold market movements is attributed to gold trader psychology; in other words, gold trading participants tend to provide a consistent reaction to the xauusd market most of the time. Technical analysis uses gold chart patterns to analyze these chart xauusd price movements. Although these gold charts represent historical data they are still relevant because they illustrate price patterns that often repeat themselves.
Understanding this xauusd trading analysis in gold trading can be a valuable tool in determining the gold trend of any market & assisting with entry & exit levels for your xauusd trades.
The goal of these technical analysis techniques is to help gold traders determine when a market is trending, and when it is not. If the xauusd price is moving in one particular direction, then we want to be on board. If it is not, all you are going to do is lose money as you will get whipsawed around and this is not what we want as investors.
Unfortunately, many traders fight the gold trend and buying/selling in the opposite direction of a this market gold trend direction, trying to pick a tops or a bottom, only to see the xauusd market move further in the direction of the trend.
Another common mistake gold traders often make is adding onto a losing position, averaging a loss. This is not a good gold trading strategy especially in a strongly trending gold trading market. It is something that experienced gold trader never do. The gold trend is your friend, never go against it.
Xauusd trading analysis studies alert gold traders of setups and there are no certainties in financial market. Profits come from using proven gold strategies & techniques to find a trending gold market and taking trades in same direction as that of the xauusd trend.
