Gold Charts and Analysis
One of the most important commodity news analyzers and data interpreters that a gold forex trader has at his/her disposal are the charts and trends. Charts and trends are critical because of their ability to predict future prices by analyzing the situations and performances of the past. The minute analysis of a forex trading chart enables a gold forex trader to take into consideration any visible pattern regarding the price fluctuations of gold. There are mainly two kinds of analysis: fundamental and technical analysis, both of which are enumerated below.
What Is Fundamental Analysis
Fundamental analysis interprets the demand and supply situation prevailing at a specific point in time that affects the price of gold. Other factors such as exchange rates, political condition, inflation, drought, war, flood etc are also taken into account for fundamental analysis. Commodity news based on fundamental analysis aims to ascertain why there are fluctuations in the price of gold and whether the current prices are too high, too low or justified in the given circumstances based on the market forces.
What Is Technical Analysis
Technical Analysis uses charts to analyze market data and interpret fluctuations in price. Technical analysis is a tool that is often used by the traders to interpret the movements of the commodity market based on price fluctuations over a period of time. Technical analysis helps predict the future behavior of prices of commodities.
Three Principal Charts
There are three principal charts that are used in the gold forex trading market: Line chart, Bar chart and Candlestick chart.
Commodity news based on Line chart depicts the price movement of gold rates or exchange rates of a pair of currencies with the help of a straight line. Bar charts, on the other hand, reflect the intra day performance of gold or pairs of currencies with the help of vertical bars. Each bar depicts four points marked by the letters OCHL to denote opening, closing, high and low as per the intra day time span under consideration. Candlestick charts are akin to bar charts, with the minor exception of the presence of a wick on both ends. When the opening value is more than the closing value, the candlestick is solid and when the situation is reversed, it is hollow.