When investing in gold , there are usually two manifestations of resistance and support. The gold price chart is a clear proof of the strength of the bulls and the bears. When the strength of the bulls is strong, it will go up, and when the strength of the bears is strong, it will go down. How to correctly determine the resistance level in gold trading ?
Gold investment usually forms a resistance level where the bears are strong and the bulls are weak. In the practice of gold speculation , due to the consistency of public expectations, the following areas often become obvious resistance areas:
- The price of gold on the day opened lower than the previous close
In the process of climbing up, there will be resistance here. This is because after a night of thinking, the long and short sides have reached a consensus on the previous closing. When the market opens on the day, if the gold price opens lower, it shows that the selling interest is very strong. In the process of gold price rebound, on the one hand, it will be hit by new selling at any time. On the other hand, when the previous close is approached, the accumulated selling in the morning will come into play, making it easy for the bulls to pass this barrier.
- The market opened lower after the day
There is resistance on a bounce back here due to heavy selling at the open.
- The obvious M head shape in the technical chart
The former high is formed because there is an obvious backlog of selling orders here. When the gold price encounters resistance and then rises again, once it is close to the previous high, there will be new short-selling forces intervening, and the bulls will become cautious. cautious. A clear M head pattern is formed on the chart, and most of the time the high on the right is lower than the high on the left.
- Be wary of the integer mark
Due to the psychological effect of people, some round numbers often become important resistances when rising.
The purpose of identifying the resistance area is to sell at the highest or second highest point, and you can generally sell before entering the identified resistance area. Or when the price of gold slips from a high, sell it on the second close to that high.