Gold trading indicator
This is an indicator which was originally developed for the Gold and Silver markets, but it could also work in other markets too, such as the SP500 index. The indicator was developed through a lot of trial and error, and tests, and big help and guidance by a 3rd party specializing in market analysis methods.
I have attached images of recent gold trends, as well as interesting patterns in the SP500, the indicator does both, and will be adding more and more examples in various time frames of gold, as I spot them, and how they were traded. The principle is the same, anything you see in one market can be applied to the other.
The indicator uses intermarket analysis and processes to detect current trend in the market, as well as possible price targets.
In the case of Gold and Silver, we use the period setting as follows:
5min to 1 hour chart: We set Period to 9
4 hour to weekly chart: We set period to 3
In the case of SP500, we experiment with both settings. in any case we trade by having the indicator deployed on 2 different charts for the market in question. So for example for gold and silver, we will have one indicator on one chart at the setting of 3 (5min to H1), and the other at the setting of 9 (H4 to Weekly).
I personally use 2 charts for each market, each indicator set differently, one to 3, and the other set to 9. I tarde both Gold and SP500, from
15min trades out to weekly strategies.
It is important to follow the main trend, as set by long term patterns, daily and weekly, watch any open recent gaps in those frames, and if the alert (BUY or SELL) is in that direction, then the gap may well be reached. Then you can use the indicator in smaller time frames too.
Also remember that Gold becomes most active during certian market hours, especially during the US market hours, during each day.
I come from a EURUSD background, and developing indicators for that market, however despite success in EURUSD, I have found that Gold offers better moves, and overall 10 times more profitability throughout the year! This led me to revisit some old algorithms, and come up with something to help wtih gold trading. As I will mostly trade Gold now.
Gold is a complicated precious metal, which is not like any other market. It is used against risk and inflation, but it is also an industrial metal.
Unlike energy commodities such as crude oil, gold is impossible to produce artificially, and it has unique industrial applications such as in space electronics. Its long term trend is always up! Crude oil cannot go to $500 because synthetic oil methods will kick in and push price back down. Gold is in a solid long term up trend, together with other medium and short term components. And this is what our algorithm is designed around.