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Education, Investing Psychology, Investing Strategies
1 month ago by

How to choose the right investment strategy

As CFD trading becomes more and more popular amongst investors, all kinds of strategies emerge because investors need to learn technical analysis to survive in the market. Therefore, they have a variety of strategies that they can use to invest in the markets. With the emergence of so many strategies, how should investors choose a trading strategy that suits them?

  1. Learn simple trading techniques. Basic and straightforward trading techniques are often more effective than complicated strategies. Simple trading techniques will not use complex methods; hence, they will not confuse investors. They are based on the candlestick charts used for direct analysis, which usually reflect the current trend in the financial markets. Investors can analyze those unfathomable trading techniques all day long instead of trading. Therefore, it is better to learn the basic skills first, the simplest trading techniques, and then learn other knowledge later as you keep trading the foreign exchange markets.
  2. The more common or popular the trading strategy, the better. The most common techniques are the ones investors need to master since they usually work. The simple reason they work is that the techniques have been proven over time by countless market reactions.
  3. Don’t waste time on esoteric trading strategies. Many CFD trading technologies are not as complex as imagined. Many techniques only required minimal research to understand the logic behind them. When encountering challenging to understand technical analysis advice when trading, you can simply ignore that. There is no positive relationship between positive trading results and the difficulty of trading techniques.
  4. Try to avoid very complicated techniques. The essence of trading is not that the more complicated the technology, the easier it is to make money. Using complex technical indicators will confuse ordinary investors, which is no help to most investors. Instead, it disrupts investors' thinking, so you should avoid overly complicated trading techniques when choosing a trading strategy to avoid having a chaotic trading routine.
Uncategorized
1 month ago by

Learn With Baron – Types of Gaps

Gaps can act as important areas of support and resistance. For instance, when an upside gap is formed and price heads higher over the next few days, any subsequent declines later on can be met with support at the lower end of the gap. If this gap gets eventually filled and selling continues, then and only then can the weakness be expected to continue. Similarly, when a downside gap is formed and price heads lower over the next few days, any subsequent rallies later on can be met with resistance at the upper end of the gap. If this gap gets eventually filled and buying continues, then and only then can the strength be expected to continue. An important thing to keep in mind is that gaps are visible only on bar and candle charts. They are not visible on line or point and figure charts.

Types of gaps

There are three types of gaps that we will be discussing in this chapter. These are:

  • Breakaway gap
  • Runaway gap
  • Exhaustion gap

In addition, we will also be discussing about a special type of pattern called an ‘island reversal’, which comprises of two gaps mentioned above: the exhaustion gap and the breakaway gap

Breakaway gap

A breakaway gap, as the name suggests, is a gap that occurs when price breaks out of a price pattern, either on the upside or on the downside. We have already discussed about various price patterns in the previous chapter. When any of these patterns break with a gap, a breakaway gap is said to have occurred. Besides, breakaway gaps can also appear when price breaks out of a support or resistance, trendline, channels etc. A breakaway gap that is accompanied by an increase in volume is a significant development and increases the probability of price continuing in the direction of the breakout. Also, breakaway gaps that occur along with high volume increase the odds that the gap will not be filled any time soon.

Runaway gap

Runaway gaps are those gaps that appear when the price is strongly trending in one direction, up or down. These gaps usually appear somewhere around the middle of the ongoing trend. They are also known as continuation gaps, because they continue the prevailing trend. As runaway gaps are continuation gaps, they must be accompanied by an increase in volume. This is because for the prevailing trend to continue, increased interest by market participants is of paramount importance. Without this increased interest, the gap is likely to quickly filled. There can be more than one runaway gap during the current move. However, with the appearance of each new runaway gap following the first gap, the probability of the trend continuing decreases as it usually signals at an overextended market. Like breakaway gaps, runaway gaps are also not filled any time soon.

Exhaustion gap

Exhaustion gaps are those gaps that appear near the end of a trend, up or down. They represent an overextended market and are usually followed by a reversal in trend. When these gaps appear, it is difficult to say whether they are runaway gaps or exhaustion gaps. Such a distinction can be made only a few days after the emergence of the gap. For instance, if after the emergence of a gap in an uptrend, price continues to exhibit strength in the following days, the gap is likely to be of the runaway variety. However, if the rally starts to fade and price inches lower in the following days, then the gap is likely to be of the exhaustion variety. Exhaustion gaps are usually accompanied by a sharp pick up in volume, sort of like a buying climax or a selling climax (these concepts will be discussed in a later chapter). Unlike breakaway and runaway gaps, exhaustion gaps are quickly filled.
Education, Investing Strategies, Market Hours, Technical Analysis
1 month ago by

EUR/USD Technical Outlook – 25, April

EUR/USD turned south after the Relative Strength Index (RSI) indicator on the four-hour chart rose above 70, suggesting that the pair's latest pullback is a technical correction.

On the downside, 1.1000 (psychological level, static level, 20-period Simple Moving Average (SMA) and 50-period SMA) aligns as important support. A four-hour close below that level could attract technical sellers and trigger an extended decline toward 1.0950 (100-period SMA, Fibonacci 23.6% retracement) and 1.0900 (psychological level, static level).

1.1050 (static level) acts as interim resistance before 1.1075 (end-point of the latest uptrend) and 1.1100 (psychological level).
Comex, Market, Technical Analysis, Uncategorized
1 month ago by

XAU/USD Technical Outlook – 25, April

Gold price managed to defend the $1,970 support and staged a rebound on Monday, with the bulls now looking to find a foothold above the flattish 21-Daily Moving Average (DMA) support-turned-resistance at $1,995.

Daily closing above it will initiate a fresh recovery mode toward the static resistance at around $2,015. Ahead of that the $2,000 round figure will offer stiff resistance to Gold buyers.

The 14-day Relative Strength Index (RSI) is edging higher above the midline, justifying the renewed upside in the Gold price. If the rebound gathers steam, Gold price will look to challenge the previous yearly high at $2,032.

On the flip side, should Gold bulls face rejection above the 21 DMA barrier, a drop back toward the previous day’s low of $1,974 cannot be ruled. Further south the the static support at $1,970 could be prodded once again.

The last line of defense for Gold buyers is seen at the 1,950 level, the confluence of the key psychological level and April 3 low.

Source: fxstreet.com
Uncategorized
1 month ago by

XAU/USD Technical Outlook – 24, Feb

Gold price remains vulnerable after breaching the key January 5 low at $1,825 support.

Gold bears keep their eyes on the seven-week low of $1,819 before testing the falling trendline support at $1,801.

The 14-day Relative Strength Index (RSI) is trading well below the midline, suggesting the downside potential remians intact, thus far. for now.

A bear cross is in the making, as the 21-Daily Moving Average (DMA) is on the verge of  cutting the 50 DMA from above. Confirmation of the bearish crossover could add credence to the downside in the Gold price.

On the flip side, any recovery will need acceptance above the previous day’s high of $1,834 to gain additional traction.

The next stop for Gold bulls is seen at the weekly high of $1,848, above which the $1,850 psychological level could offer stiff resistance.
Comex, Investing Strategies, Technical Analysis
4 months ago by

XAU/USD Technical Outlook – 14, Feb

From a technical perspective, a sustained break and acceptance below the 50-day SMA, currently around the $1,856 region, will be seen as a fresh trigger for bearish traders. The gold price could then accelerate the fall towards the next relevant support near the $1,830 area en route to the $1,818-$1,817 zone and the $1,800 round figure.

On the flip side, any subsequent move up is likely to confront stiff resistance near the $1,875 region. This is followed by the $1,900 round-figure mark. The latter should act as a pivotal point, above which a bout of a short-covering could lift the Gold price to the $1,925-$1,930 congestion zone.
Comex, Investing Strategies, Market, Technical Analysis
4 months ago by

XAU/USD Technical Outlook – 1, Feb

Spot gold plunged on US Dollar demand, with XAU/USD bottoming at $1,900.70 a troy ounce on Tuesday.  Risk aversion dominated the first half of the day, but American traders experienced new hopes and turned their back on the Greenback, pushing the bright metal into positive ground.

The catalyst for the US Dollar decline was a minor report that US Federal Reserve officials have been paying close attention to. The United States Employment Cost Index rose in the last quarter of 2022 by 1%, below the 1.1% expected and easing from 1.2% in the previous quarter. Additional signs of easing inflationary pressures boosted high-yielding stocks ahead of the US Federal Reserve monetary policy decision, reviving hopes for a soon-to-come pivot. The American central bank is widely anticipated to hike rates by 25 bps, minimizing the odds of a severe recession.

At the same time, US Treasury yields retreated from their recent highs, with the 10-year note currently offering 3.53%, down 2 bps. Meanwhile, stocks managed to change course. European indexes trimmed their early losses and settled mixed around their opening levels, while US indexes trade in the green.

Source: fxstreet.com
Comex, Investing Strategies, Market, Technical Analysis
4 months ago by

XAU/USD Technical Outlook – 31, Jan

The near-term soft tone falls short of anticipating a steeper decline. In the daily chart, technical indicators ease but remain well above their midlines, with the Relative Strength Index (RSI) barely correcting overbought conditions. At the same time, the bright metal develops well above a firmly bullish 20 Simple Moving Average (SMA), which heads north far above the longer ones. Finally, the same chart shows that buyers are defending the downside in the $1,910 price zone.

The 4-hour chart offers a neutral-to-bearish stance. The pair is meeting near-term sellers around a flat 20 SMA, although the 100 and 200 SMAs maintain their firmly bullish slopes below the current level. Technical indicators, in the meantime, remain within negative levels, although lacking directional strength.

Support levels: 1,910.00 1,896.50 1,884.30

Resistance levels: 1,935.10 1,950.00 1,966.15

Source: fxstreet.com
Comex, Investing Strategies, Technical Analysis
4 months ago by

XAU/USD Technical Outlook – 27, Jan

Having witnessed a fakeout to the upside from a rising wedge formation on Tuesday, bears took charge and triggered a corrective decline in the Gold price on Friday.

In doing so, Gold price closed the day below the lower boundary of the wedge, then at $1,940, validating a rising wedge breakdown. The natural tendency of the rising wedge is usually to yield a downside break, which eventually materialized on the United States Gross Domestic Product release.

Gold sellers need to crack a strong support near $1,918 to challenge the weekly low at $1,911. Should the correction deepen in the Gold price, the $1,900 round level could be put at risk.

With, the 14-day Relative Strength Index (RSI), however, in the positive territory above the midline, Gold price still remains a good buying opportunity on pullbacks.

On the upside, powerful resistance near the $1,950 psychological barrier remains a tough nut to crack for Gold bulls. Ahead of that, Gold price needs to find acceptance back above the $1,940 round figure.

A firm break above the $1,950 hurdle will call for a test of the next resistance placed around April 20 2022 highs near $1,958.
Uncategorized
4 months ago by

XAU/USD Technical Outlook – 25, Jan

The Gold price is on track for a crash should the US dollar bust to life given the placement of the price in the market structure. The US Dollar has been testing the daily trendline resistance as follows:

If this were to break then the Gold price will likely be headed lower, but there is red news scheduled for Thursday so any moves prior to that might be limited and a distribution schematic and higher highs could be more likely in the lead up:

Bullish trendline for Gold price is vulnerable.

A break of Gold price structures is eyed for the days ahead so long as resistance holds. 

A sell-off and capitulation of the Gold price bulls could lead to a significant run towards $1,900. 

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