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Gold Technical analysis – Volatility takes the main role

Global markets condition is driven by risk off sentiment. Commodity markets are mixed in terms of percentage losses and gains. The recent gains in Gold are attributed as Brexit driven rallies. When we look at intraday time frame, the structure becomes obvious and anticipatory. Some traders are speculating that gold’s price action will be limited to upside, where others are still outright short. Recent movements in 1 hour chart write down the price behavior in a clear way.

Below is the gold price action in 1 hr chart

Gold Technical analysis is driven by volatility

1. Recent Impulsive buying behavior visible in price action is driven by influx of liquidity and trap hunting. We can notice the steepness of movement in the price chart. Gold jumped from 1250 to 1350 respectively marking highs and lows. Market could’ve trapped traders and forced liquidation during this process.

2. One obvious question we get after observing such a kind of price action is – Does it tells something about market sentiment and participants mindset? By looking at this structure we can deduct the strength of buying pressure. In order for buyer’s dominance to continue we should see constant buying pressure on dips.

3. Corrective movements followed the impulsive price action. Gold started trading within the range in a consolidation structure. It seems like market is pausing here a bit now considering the moves we have seen since Friday. The high of range is at 1360 and low at 1305. Volatility is reduced sharply within this structure.

4.The game changer is volatility. We should see how prices react when market becomes volatile whether it expands upside or stagnate downside, it won’t count unless it’s accompanied by volatility. Traders should see how price behaves when volatility increases to gauge market direction.


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About the Author:

Balaji is a Speculator, Investor and Trader (All in All!!!) and self published author. Trading in the Markets since decade, have seen more ups and downs along with institutional trader's lifestyle. He usually trades Nifty, Bank Nifty, Commodities, Futures cum Options around both Indian and global Markets. Balaji applies highly analytical and systematic Price Action strategies He blogs passionately about Trading strategies, Price Action Trading, Technical analysis, Macro events, Market setups, Financial and Economical topics. Apart from Trading and Blogging, Balaji also mentors aspiring Traders and Investors on becoming successful in highly competitive financial Markets.

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