Our technical analysis can be used to identify low-risk entry points and appropriate exit points, both long and short, for trading gold. The three techniques that we use are described below.
Elliot Wave Analysis
R N Elliott developed his theory of cycles and trends by identifying that investor psychology and behaviour was predictable and could be used to predict market highs and lows. He proposed that market prices move in specific patterns that can be identified on charts and used to predict future price moves. The patterns develop in the form of waves, either impulse waves or corrective waves in the opposite direction – waves 1, 3 and 5 are impulsive and waves 2 and 4 are corrective.
Each wave has its own characteristics and once you have identified which wave or cycle the market is currently in, the future price movements can be predicted with some certainty.
Fibonacci Retracements
A Fibonacci sequence is a series of numbers where the next number in the series is found by adding together the previous two numbers. The ratios between these numbers are found repeated extensively throughout nature and, amazingly, are also found repeated in the charts of financial markets. This is due to the behaviour of crowds and investor psychology and is a technique used extensively by traders as a technique to predict and identify retracement levels in corrections to impulse waves. The most frequently seen Fibonacci retracements that we look for are 23.6%, 38.2%, 61.8% and 76.4%.For more details of this fascinating area of technical analysis and its amazing application throughout the natural world as well as in financial trading, see our Technical section or our Bibliography for suggested reading.
Japanese Candlesticks
The ancient Eastern trading techniques using candlestick patterns (a candlestick is simply a chart pattern where the opening price, daily movement and closing price are depicted as a “candlestick” on the chart), offer a unique visual aspect to aid in technical analysis and complete our trading strategy arsenal.This technique, using the three powerful technical tools working together, has now been picked up and commented on more widely, revealed in Stocks and Commodities magazine (March 2010) edition – however we have been using the technique successfully for many years.
YOU SHOULD NOT TAKE ANY MATERIAL posted on this BLOG AS RECOMMENDATIONS
TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED.
TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED.
Do your own due diligence.
No one knows tomorrow's price or circumstance.
I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader.
I do not accept responsibility for being incorrect in my speculations on market trend.
I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader.
I do not accept responsibility for being incorrect in my speculations on market trend.
King Regards
