Moving Averages (MA) help smooth out the price action, so you can better see the trend.
- For longer-term trends: Try the 50-day and 200-day moving averages.
- For short-term shifts: use the 20-day MA to spot shifts on smaller timeframes.
When a shorter MA crosses above a longer one, that one is often a bullish signal (gold might go up). And, when the opposite occurs, it can signal a bearish move.
Watch the Relative Strength Index (RSI)
The RSI is there to tell you whether gold is overbought or oversold. Here is how:
- If the RSI is above 70, then it means that the asset is overbought. Thus, the price may fall soon.
- If the RSI is below 30, then it means that the asset is Oversold. Thus, the price may rise soon.
But never rely on RSI alone. You should combine it with trend and support/resistance zones.
Check gold during key trading sessions
Gold is usually most active during the London session, the US session, and the overlaps between the two. These sessions often bring high volatility, which means more price movement and better trading opportunities.
Entry and exit points
Wait!! The most common mistake that traders make is trading because the charts look interesting.
But it is a call to the risks.
And, risk management is the key to successful trading. Thus, you should always plan your entry and exit points, as explained below:
- Entry: set smarter entry points based on a pattern, indicator signal, or breakout from the support and resistance levels.
- Stop-loss: Always set the stop-loss limit to restrict your losses if the trader goes against you.
- Take-profit: Never forget to lock in your gains at your target level.
Along with this, here are the common mistakes that every trader should avoid while trading XAU/USD:
- To start trading without a clear strategy or trading plan.
- To risk too much on a single trade.
- To trade without emotional control, like fear and greed.
