Gold Charts and Precious Metals

You can use gold charts to interpret gold prices over a period of time. These valuable charts help you make judgment on gold investments and to predict the potential prices for the future. However, it is advisable not to use these charts as the only weapon in your investment arsenal.

Chart analysis or chart reading is more of an art than science. It means that you will not be guaranteed of certain prices just because you have spot some chart pattern in your charts. You can make probabilities of gold prices through the past market prices and your experience in reading the charts. The first thing you should analyze in a chart is the current price to see whether the prices are going up or down. Also you should find whether the price movement is gradual or sharp. The second thing is to see for how long the current trend is persisting.

You should understand the fact that you are not finding the causes of the trend here rather you should look when to buy, sell or hold. Thirdly you should find the major points where the resistance or support can stop the move or where the extended move is possible. With the resistance/support points you can determine whether the trend would continue or would go in the reverse direction. It may even go sideways. The point is you are looking for a price point where you can make an entry.

There are certain things you should look into when you are reading gold charts. Normally, you are looking price trends for a single market and at an end of day perspective. However, due to the extended trading time in these global markets you should have an inter-market approach. When you are new to trading and chart analysis, it is better to have a single market approach.

In a chart you will find price represented in the vertical axis and time represented in the horizontal axis. There are four types of prices represented in gold charts that are open, close, low and high. While open is the price of gold at the beginning of the trading period, close is the gold price that prevailed during the end of the particular trading period. High is the highest price observed during the trade period and low is the lowest price observed during the trade period.

There are three types of gold charts available in the market that are line charts, bar charts and candlestick charts. In a daily line chart it will be difficult to find the gaps or breakups. However, visualization is easy with line charts. In technical analysis bar charts are better for advanced analysis. You will be able to plot price gaps in bar gold charts. That means you will be able to find the complete movement of gold prices during the particular trade period. Candlestick chart is like a bar chart but it allows you to have some particular interpretations.

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