Momentum XAUUSD Technical Analysis & Momentum Oscillator XAUUSD Signals
Momentum indicator uses math equations to calculate the line of plotting. Momentum measures the velocity with which gold price changes. This is calculated as a difference between the current gold price candlestick & the average gold price of a selected number of gold price bars ago.
Momentum represents the rate of change of the gold price over those specified time periods. The faster that gold prices rises, the bigger the increase in momentum. The faster that xauusd trading prices decline, the bigger the decrease in momentum.
As the gold price movement starts slowing down the momentum will also start to slow down and return to a median level.
Momentum
Gold Technical Analysis and Generating XAUUSD Signals
This xauusd indicator is used to generate technical buy and sell signals. The three most common methods of generating trading signals used in xauusd trading are:
Zero Centerline Gold Trading Crossovers XAUUSD Trading Signals:
- A buy trading signal is generated when Momentum crosses above zero
- A sell trading signal is generated when Momentum crosses below zero
Oversold/Overbought Levels:
Momentum is used as an overbought/oversold indicator, to identify potential overbought & oversold levels based on previous readings: the previous high or low of the momentum is used to figure out the overbought & oversold levels.
- Readings above the overbought level mean the xauusd is overbought and a gold price correction is pending
- While readings below the oversold level the gold price is oversold & a gold trading price rally is pending.
XAUUSD Trend-Line Break-outs:
XAUUSD Trend lines can be drawn on the Momentum indicator connecting the peaks and troughs. Momentum begins to turn before gold price thereby making it a leading indicator.
- Bullish reversal - Momentum readings breaking above a downward xauusd trend-line warns of a possible bullish reversal xauusd signal while
- Bearish reversal - momentum readings breaking below an upward xauusd trend line warns of a possible bearish reversal gold trading signal.
Technical Analysis in Gold Trading
