Support & resistance Levels In Gold Trading

2.  Support and Resistance Levels in Gold
Trading.
 Trading Gold With Support and Resistance
Levels.
 Major Resistance Levels and Minor
Resistance Level.
 Trading Gold Using Pivot Points

3.  Support and Resistance levels is one of the
most widely used concepts when it comes to
trading Gold metal online.
 Support and resistance levels are also
commonly used in trading other financial
instruments such as Forex currencies, stock
indices and commodities.
 Support and resistance levels that form on the
Gold price chart tend to act as barriers that
prevent the price of Gold getting pushed
beyond a certain point in a particular direction.

4.  A support level prevents the price of Gold from getting pushed
downwards beyond this particular level.
 Therefore, this support level is regarded as a floor for the Gold
price as it prevents the market from moving downwards past a
certain point.
 The process of hitting the support level and then bouncing back is
called testing the support.
 The more times a support level is tested the stronger it is, in the
example above the support level was tested 3 times without
breaking after which the market downward trend finally reversed
and started moving in the opposite direction.
 Once this level has been determined on the Gold trading chart,
then traders use it to place their buy orders and at the same time
put a stop loss order just a few pips below this level.

5.  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 market price from
moving upwards beyond this point.
 The resistance level was tested 5 times without
breaking, the more times a resistance level is tested
without breaking, the stronger it is.
 Once this resistance level has been determined, traders
will use this level to place their sell orders at this level
and at the same time put a stop loss order a few pips
above this resistance level.

6.  Sometimes support and resistance levels are not strong enough to
stop the movement of prices from moving in a particular direction.
When the prices move past the support and resistance levels we
say that these levels have been broken.
 This is why traders use stop loss orders when trading these levels,
just in case these levels do not hold and price moves past them.
 The question is what happens when these levels are broken and
prices move past these levels?
 The answer is that when these levels are broken they then change
from one to the other - what this means is that:
 When a support level is broken it becomes a resistance level
When a resistance level is broken it becomes a support level

7.  When it comes to trading Gold, when a support level is
taken out, the stop loss orders placed below that level are
also taken out thus reducing the overall momentum that
the previous buyers had.
 This gives an opportunity to sellers to short Gold and then
place their stop loss orders just above this level that has
now turned into a resistance level.
 As long as this resistance level holds and prices don't
move above this new resistance level then the market
sentiment is bearish and the market prices are likely to
continue moving downwards.
 All in all the traders who will have opened sell trades will
place their stop loss orders a few pips above this level.

8.  When the price of gold broke the resistance level and
moved above this level after some time the prices tried to
move lower again but could not go lower than this level.
 This is because the resistance level had now turned into a
support level.
 The prices were quickly pushed further upwards by the
buyers after touching this new support level. This is what
happens in Gold trading, when a resistance level is broken
it then turns into a support level.
 Another reason why the prices of Gold did not move down
again is because the sellers who had opened their short
trades all their stop loss orders that were placed above
this resistance levels were hit therefore reducing the
momentum of the sellers.

9.  When it comes to major resistance/support levels
price will stay at these levels for some time and
price may either consolidate or form a rectangle
pattern when prices get to this point.
 This level will be tested several times before it is
either broken or holds and price does not get to
move past this major resistance/support level.

10.  Minor resistance/support levels are price
points where price will form these short
term minor resistance/support levels.
 Since these are minor resistance/support
levels the price will quickly move past these
points.
Upward Trend
 A series of minor resistance/support levels
whose general direction is upwards will be
formed.

11.  Pivot Points is a set of technical indicators that were
developed by floor traders trading the commodities
markets so as to help them identify potential market
turning points.
 These turning points were known as pivots. These pivot
points are calculated in order to determine the levels at
which the market sentiment of the current trend could
change from bullish to bearish or vice versa.
 Gold traders use these points as markers of support and
resistance levels.
 These pivot points are calculated as the average of the
high, low and close from the previous trading session:
Pivot Point = (High + Low + Close) / 3

12.  In technical analysis, a pivot point is a significant financial market
indicator that is used by traders to predict the price movement.
 This indicator is calculated as an average of significant prices (high,
low and close) from the performance of market prices in the previous
trading period.
 Bullish Sentiment - If prices in the following period trade above the
central pivot point; this is evaluated as a bullish sentiment.
 Bearish Sentiment - If prices in the following period trade below the
central pivot point; this is evaluated as a bearish sentiment.
 A Pivot and the associated support and resistance levels are often
turning points for the direction of the price movement.
 In an upward trend - the price stays above the pivot point, the
resistance levels may represent a ceiling level for the price and if
prices go above these levels then the uptrend is no longer sustainable
and a retracement may occur.
 In a downward trend - the price stays below the pivot point, the
support levels may represent a floor level for the price and if prices go
below these levels then the downtrend is no longer sustainable and a
rally (pullback) may occur.
 The Central Pivot Point.