The gold market is very sensitive to market information, and the price often responds in a very short period of time. Investors who intends to chase the market flow would often require a battle between Bull and Bear. The following lecture would provide simple methods to help readers to make further judgments.
Observe the Trend First
First of all, the reader would require to observes the Daily range chart on Gold, whether the trend of gold price is roughly rising or falling.
In the figure below, the daily level chart of gold shows a general outline of a downtrend, implying that the gold price may be under a foreseeable pressure in the near future.
Depicting the combined pattern of the Candlestick
Use the interpretation method of the combined pattern of the candlestick in the 1H range chart to estimate the possible scope of short-term market swings. The dotted-line in the picture below depicts the upper resistance level and the lower support level of the W-shape.
Interpretation On Morphology
The figure below shown the W-shaped outline depicted by the combination of candlesticks, it is concluded that the Short-Resistance is on 1850, and the Short-Support is at 1835. At this time, Investors who wishes to make Long order(s) after pullback occurred can refer to the Short-Resistance. Once the quotation approaches the threshold, Investors could attempt to conduct Take-Profit to close the order(s) hold. Since the Daily range indicates the Bearish tendency is still dominating the market, therefore, Investors could attempt to place Short order(s) aiming at the Support spot while the market price is on relative high for the interval. In this way, by interpreting the candlestick pattern, we can formulate a trading plan and start to aim for Bargain-Hunt & High-Throw operation, whom would be capable to measure the approximate location of Short-Resistance & Short-Support, so that we can try to avoid the not ideal situation of buying at ridge and selling at trough.
Epilogue & Reminder
The main function of the Candlestick is to record the price changes in a specific interval, and observing the correlation between the Candlesticks may help us to understand the general trend and dividing point of the quotations in a specific period. Therefore, the ability to interpret the combination of the candlestick could be very useful. However, it should be noted that some investors will only interpret the quotations of 2 to 3 candles to predict the next trend in a hurry, so here would like to remind Investors that the combination of candles can also reveal the Resistance & Support for the specific range. If Investors could practice drawing more regularly, you will be able to make a major breakthrough in the ability to master measuring the Resistance & Support, that may greatly prevent to encounter the problem of always buying at highs and selling at lows.
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