Technical Analysis for Gold

Everything in Track 3 applies to gold unchanged. What changes is the scale: gold's daily range is several times a major currency pair's, so levels are wider, stops are wider, and a setting that works on EUR/USD produces something quite different here. This lesson is Track 3 with gold's numbers substituted in.

Support & resistance on gold

Track 3's lesson 2 said levels are zones rather than lines, and the width of the zone should come from the instrument's volatility. On gold that width is large.

A trader who brings a 5-pip habit to gold is drawing a zone worth 5 cents, which price crosses several times a minute. The practical rule is the same as everywhere else: size the zone from ATR, not from a pip count you are used to.

The levels that matter most on gold

• Round hundreds. $2,000, $2,400, $2,500. Gold respects large round numbers more visibly than most instruments, because both retail and options activity cluster there.
• Round fifties, weaker but present.
• Previous day's high and low, and the previous week's — unambiguous, so rules built on them are testable.
• All-time highs, which behave distinctively: there is no overhead supply from trapped buyers, because nobody above is underwater.

Trendlines & channels on XAU/USD

Trendlines suffer on gold from the problem Track 3's lesson 9 described generally: they are drawn by eye and the eye is accommodating. Gold's volatility makes it worse, because a line can be drawn through almost any two points and the wicks give plenty of choice.

1. Draw from bodies or from wicks, and always the same one. Mixing them is how a trendline becomes whatever you need.
2. Three touches before it is a line. Two points define nothing.
3. Expect the line to be pierced. On gold, a break of a trendline by several dollars can be entirely within one candle's ordinary range.
4. Confirm with structure, not with the line. The trendline is a visual aid; the swing highs and lows from Track 3's lesson 1 are the actual evidence.

Channels — a parallel line on the other side — are more useful than single trendlines on gold, because the width of the channel is itself a volatility measurement. A channel that suddenly widens is telling you the regime changed, which is information a single line cannot carry.

Moving averages · the 50 EMA and 200 SMA for gold

Track 3's lesson 5 said a moving average is a lagging summary, that its period should come from a purpose, and that slope matters more than crossovers. All of that holds. Two periods are worth knowing specifically on gold because a great many participants watch them.

• Their significance is partly self-fulfilling, which is a real effect rather than a criticism — a level many people act on is a level with orders at it.
• Slope over crossover, exactly as Track 3 argued. The 50 crossing the 200 is an arithmetic consequence of a move that already happened.
• Treat them as zones. On gold, "at the 200 SMA" means within several dollars of it.
• They fail in ranges, and gold ranges for long stretches. In those periods price crosses both repeatedly and neither is telling you anything.

RSI Divergence on gold

Track 3's lesson 7 set out the case against divergence as a signal: it is partly arithmetic, it repeats within a trend, and it can only be confirmed after the second peak is complete. None of that changes on gold, and two things make it slightly more treacherous here.

• Gold trends hard when it trends. RSI can sit above 70 for weeks during a sustained move, producing divergence after divergence while price continues.
• The moves that follow a genuine reversal are large, which makes the successful examples memorable and the unsuccessful ones forgettable — the exact conditions under which a weak signal acquires a strong reputation.

Using it as a question

1. Require a level. Divergence at a round hundred you marked beforehand is worth looking at. Divergence in open space is not.
2. Require a structural trigger. The trade is the break of the swing that formed the second peak, not the divergence itself.
3. Take the stop from the structure, sized per Track 5, which on gold means a wider stop and a smaller position than the pip count instinct suggests.
4. Expect it to fail regularly, and size for that rather than for the memorable examples.

The summary for this whole lesson is the same as Track 3's: the tools are fine, the scale is different, and every setting has to be re-derived from gold's own volatility rather than carried over from a currency pair. The next lesson puts that into specific strategies, and the one after it into sizing.