Gold Trend Analysis Basics for Beginners (XAUUSD)

Today I will teach you an effective way to execute trend analysis on Gold XAUUSD.

You will learn how to identify market trend.

We will discuss minor, mid-term and short-term trends and their interconnections.

https://www.youtube.com/watch?v=C7nWiUwvYDQ

Price Action Basics

Let's start with a short theory.

There are several ways to identify the market trend on Gold.

One of the most efficient ones is based on price action analysis.

Let me explain.

Impulse & Retracement Legs

When we do price action trading, we perceive price movements on Gold chart as a sequence of impulse and retracement legs.

• An impulse leg is a strong bullish or bearish movement.

• A retracement is a correctional movement within the impulse.

A retracement strictly shorter than an impulse leg and should strictly complete within the range of an impulse.

That's how such a way of analysis looks in practice on Gold.

Trend Analysis

In price action analysis, the positioning of impulse and retracement legs is used for the identification of the market trend.

Bullish Trend

A bullish impulse, a retracement and the second bullish impulse with a completion above the high of the first impulse will confirm an uptrend.

• The highs of the impulses will be called Higher Highs HH.

• The low of a retracement between them will be called a Higher Low HL.

A bullish trend will be violated if the price violates the level of the last Higher Low.

For that reason, it will always be a very critical point in an uptrend.

Bearish Trend

A bearish impulse, a retracement and the second bearish impulse with a completion above the low of the first impulse will confirm a downtrend.

• The lows of the impulses will be called Lower Lows LL.

• The high of a retracement between them will be called a Lower High LH.

A bearish trend will be violated if the price violates the level of the last Lower High.

For that reason, it will always be a very critical point in a downtrend.

Example

That's how a trend analysis with the application of impulse/retracement legs looks.

Minor, Mid-Term, Long-Term Trend

Depending on the scale and a price duration of the impulse legs that you analyse, the market trend can be different.

Ignoring minor price movements and paying attention to more significant waves will entirely change a perspective.

And here I will need to introduce you to the notions of minor, mid-term and long-term trends.

• Minor trend is the trend based on the smallest recognizable impulse legs.

• Long-term trend is the trend based on the biggest recognizable impulse legs.

• And mid-term trend is simply in-between, ignoring minor movements but longest waves.

Above is the example of a complete trend analysis on Gold XAUUSD chart on a daily time frame.

1. The market is trading in a long-term bullish trend.

   
   

2. When the price set the last HH, it established a mid-term bearish trend within the last bullish impulse of a long-term bullish trend.

   
   

3. When the price set the last LL in a mid-term bearish trend, it started a correctional movement and established a minor bullish trend within its last bearish impulse.

And remember that the same rules and the same logic can be used on any time frame that you analyse.

Summary

Market trend identification is the most important step in Gold analysis.

This price action method is simple to grasp, yet very efficient and accurate.

Use that for day trading, scalping or swing trading XAUUSD.