There are 5 important things that you should analyze on Gold on a daily time frame to accurately predict long term, midterm and short term movements.
In this article, I will share with you a step-by-step guide for daily time frame analysis that you can apply on Gold or any other financial instrument.
1 - Identify the market trend
When you analyze a daily time frame, you should identify long term, midterm and short term market trends.
Long-term trend is based on the analysis of one year long price action.
In the example above, Gold is trading in a long term bullish trend because the price keeps setting new higher high and new higher lows during the year.
Midterm trend is based on the analysis of a price action for the last 4–5 months.
Above, we can clearly see that a mid-term trend is bullish because again, the price sets new higher highs and higher lows over time.
Short-term trend is based on the analysis of price movements for the last 2 months.
Short-term price action is also bullish on Gold, with a clear sequence of higher highs and higher lows.
According to the trend analysis, long-term, mid-term and short-term trends are bullish.
2 - Identify the directional bias
The directional bias defines a highly probable future direction on the market.
In our example, we can anticipate that Gold will keep growing among all the dimensions: long-term, mid-term and short-term.
3 - Execute structure analysis
Identify important historic horizontal and vertical structures.
That will be the points from where you should look for trading opportunities.
When you analyze key levels, identify the structures that are lying close to the current price levels.
Make sure that all the structures that you spotted were respected by the market in the past.
4 - Look for price action patterns
Price action patterns are the language of the market.
Proper identification of the patters will help you correctly understand the intentions of the market participants.
You can see that a bearish breakout of a rising channel triggered a correctional movement on the market.
Gold started to fall steadily within a bullish flag pattern and after it tested a key support, the price violated the resistance of the flag.
5 - Analyze candlesticks
Candlestick patterns can provide extra clues and confirmations.
You can see that the market formed multiple rejections from key support, an inside bar formation and bullish engulfing candle.
Violation of the inside bar to the upside with a strong bullish candle is an important bullish signal.
Combining trend analysis, structure analysis, price action and candlestick analysis, and you can make predictions and look for trading opportunities.
You can also make your analysis even more sophisticated, for example, analyzing fundamental analysis or applying technical indicators.
