Stochastic XAUUSD Indicator Overbought and Oversold Levels

Stochastic oscillator xauusd indicator is used to look for overbought/oversold xauusd signals. Overbought levels are above 80% level and oversold levels are below 20% level.

The key is to not only look at Stochastic oscillator xauusd indicator when the %K or %D lines touch or cross overbought/oversold, but also when they cross over and back through these levels.

Just as with other xauusd momentum indicators such as RSI indicator the Stochastic oscillator xauusd indicator can stay inside the overbought & oversold levels for some time. When this xauusd stochastic oscillator indicator stays within these levels for a long time it indicates strong upward xauusd trend (overbought) or strong downwards xauusd trend (oversold).

When the stochastic lines cross back below or above these overbought & oversold levels it is usually a good indication of an upcoming xauusd trend reversal.

A trader can look for further xauusd signals to make the oversold or overbought levels more reliable if:

Buy XAUUSD Signal Using Stochastic Oscillator Oversold Levels

• Before Buying, the %K & %D lines turn upwards from below 5%.
• A reading that is floating near 5% means that xauusd bears are in control and there is selling of the xauusd. A trader should wait for the Stochastic Oscillator to move back above 5% as a sign that the selling pressure is easing.

The Buy xauusd signal is confirmed when the stochastic oscillator xauusd indicator moves above oversold, then after a while returns to oversold but this time moves up immediately without staying at the overbought.

Buy XAUUSD Signal Using Stochastic Oscillator Oversold Levels

Sell XAUUSD Signal Using Stochastic Oscillator Over-bought Levels

• Before Selling, the %K and %D lines turn down from above 95%.
• A reading that is floating above 95% means that xauusd bulls are in control and there is buying of the xauusd. A trader should wait for the Stochastic to move below 95% as a sign that the buying pressure is easing.
• The sell signal is confirmed when the stochastic moves below overbought, then after a while returns to overbought but this times moves downward immediately without staying at the overbought.

Sell XAUUSD Signal Using Stochastic Oscillator Over-bought Levels

Looking at different chart timeframes when using oversold and overbought levels can also help to determine the correct entry strategy when opening a gold trade.

The main theory is to trade with the gold trend. Always double check the xauusd signals with the longer term stochastic oscillator indicators to confirm xauusd signals on the shorter xauusd chart timeframe periods.