What Is Involved in the Technical Analysis of Gold?
Among the many factors that determine the success or failure of gold trading, the most critical is whether the price of gold can be correctly analyzed and judged. Gold trading is not like buying. It is entirely by luck. Even if income can be obtained, the results cannot be controlled at all, and it should be predicted through certain analysis. There are two main methods for predicting the price trend: basic analysis and technical analysis. The two are to analyze the market from two different perspectives, and each has its own characteristics in actual operation, so investors should use them in combination.
Gold technical analysis
- Generally speaking, gold technical analysis is divided into message side and
- 2.
- Basic points of Dow Jones theory :
- Dow's theory is mainly applied to the stock market, but like other technical analysis theories, it can also be appropriately adjusted and applied to various investment markets according to the different characteristics of different markets.
- According to Dow theory, there are three trends in the stock price movement, the most important of which is the basic trend of the stock, that is, the situation of the stock price rising or falling broadly or comprehensively. This change usually lasts for one year or more, and the total stock price rises (falls) by more than 20%. For investors, the continuous upward trend has formed a long market, and the continued decline has formed a short market.
- The second trend of the stock price movement is called the secondary trend of the stock price. Because the secondary trend often moves in the opposite direction to the basic trend and has a certain pinning effect on it, it is also called the correction trend of the stock price. The duration of this trend ranges from 3 weeks to several months, and the increase or decrease of the stock price is generally 1/3 or 2/3 of the basic trend of the stock price. The third trend of stock price movement is called short-term trend, which reflects the movement of stock price within a few days. Corrective trends usually consist of three or more short-term trends.
- Basic trends:
- That is, from a large perspective, the changes in the rise and fall. Among them, as long as the next rising level exceeds the previous high. For each secondary drop, the wave bottom is higher than that of the previous drop, so the main trend is upward. This is called a bull market. Conversely, when each intermediate decline brings the price to a lower level, and the subsequent bounce cannot bring the price to the previous high, the main trend is a decline, which is called a short market. Usually (at least theoretically, this is the object of discussion) the main trend is the only target that long-term investors consider among the three trends. The approach is to buy stocks in the long market as soon as possible, as long as he can be sure that the long market has started , Hold until it is determined that the short market has formed. They will not pay attention to all secondary declines and short-term changes in the overall megatrend. Of course, for those who make frequent transactions, secondary changes are a very important opportunity.
- Secondary trends:
- It is a kind of reactionary market in which the main trend moves in the opposite direction and interferes with the main trend. In the long market, it is an intermediate decline or "adjustment"; in the short market, it is an intermediate rise or rebound. Generally, in a bull market, it falls between one-third and two-thirds of the main trend's rising part. However, it should be noted that the principle of one-third to two-thirds is not static. It's just a simple illustration of probability. Most secondary trends fluctuate within this range. Most of them stopped very close to halfway. Reduction of the original main increase of 50%: such reductions are less than one-third, and at the same time, some of them have almost lost the previous increase. Therefore, we have two criteria for judging a secondary trend. Any market that is in the opposite direction to the main trend usually lasts for at least three weeks; it falls back by 1/3 of the major trend. Secondary trends are often confused. Its confirmation, the correct evaluation of its development, and the determination of its entire process, have always been a difficult problem in the theoretical description.
- Short-term changes
- They are transient fluctuations. Rarely more than three weeks, usually less than six days. Although they are meaningless, they make the whole process of the development of major trends full of mysterious and changeable colors. Generally, the main trend component, whether it is a secondary trend or two secondary trends, consists of a series of three or more distinguishable short-term changes. The inferences from these short-term changes can easily lead in the wrong direction. In a stock market whether mature or not, short-term movements are the only ones that can be "manipulated". The major and minor trends cannot be manipulated.
- The above three trends in stock market volatility are very similar to those of the waves. In the stock market, the main trend is like the entire process of each rise (fall) of the tide. Among them, the bull market is like a high tide, one after another, the waves continue to slap on the coast until they reach the highest point marked. Then gradually receded. The fading ebb can be compared with the short market. During the high tide, the water level of each subsequent wave rises more than the previous wave but recedes less than the previous wave, gradually increasing the water level as much as possible. During the ebb, each subsequent wave is lower than the previous, and the latter cannot recover the height reached by the previous wave. These waves during high tide (low tide) are like secondary trends. Similarly, the surface of seawater is covered by microwave ripples, which are not important daily changes compared to short-term market movements. Tides, waves, and ripples represent major market trends, secondary trends, and short-term movements.
- Elliott Wave Theory
- Eliot scholars classify prices in a fixed wave pattern. These models can indicate future indicators and reversals. Waves that move in the same direction as the trend are called push waves, and waves that move in the opposite direction to the trend are called correction waves. The Elliott wave theory divides the propelling wave and the correcting wave into five and three main directions, respectively. These eight directions form a complete wave cycle. The time span can range from 15 minutes to decades.
- The challenging part of Elliott's wave theory is that one wave period can be composed of eight wavelet periods, and these waves can be further divided into push and modify waves. Therefore, the key to Eliot's wave theory is to be able to identify the environment in which a particular wave is located. Eliot also uses the Fibonacci flyback phenomenon to predict the peaks and valleys of future wave cycles.