Many investors who look to add gold stocks to their portfolio will use a gold chart to provide them with information on gold prices. These charts go further than just providing price information, and can be used for technical analysis. The same information you would look for when trading stocks, or the information that helps you when stock picking, will be found when performing chart analysis of a gold chart.
There are a number of different tools that you can use to forecast the price movement of gold. One of these tools would be using candlestick patterns to provide a visual cue of the trends taking place.
When considering at which point to enter or exit from gold investments, a gold chart with candlestick patterns is a good way to find signals. There are twelve important patterns to learn when using candlestick charts. These patterns will allow you to determine the most likely signs of reversals, and locate support and resistance points on the stock market. If you are not familiar with how to perform chart analysis, you can find stock market videos which will teach you how to read the different patterns.
An example of a candlestick patterns that you can watch for on the gold chart is the “hanging man”. This pattern is depicted by one candle with a short white body and a lower shadow that is at least twice the length of the body. The longer the lower shadow, the stronger the chances of a reversal occurring. This candle will appear at the top of an uptrend. If the following day sees a gap up from the previous day’s close, that will signal a set up for a stronger reversal. The hanging man at the end of an uptrend indicates that sellers are stepping into the trend. This is a point where a reversal can occur, and if you are holding any gold, it may be a good time to sell before the price falls.
The hammer man is the opposite of the hanging man. It is depicted on a gold chart by a short black body with a lower shadow at least twice the length of the body. The longer the lower shadow, the more likely a reversal will occur. The hammer man will appear at the end of a downtrend. The candle body can be black or white, It does not really matter. However, a white candle would single a more bullish attitude. If the next day shows a gap down from the previous day’s close, it could signal a set up for a stronger reversal, provided that the next day after the hammer signal opens higher. In this case, you would consider buying gold before the price rises.