A gold price chart is an excellent analysis tool. A chart is simply a graph of the prices of gold over a particular period of time. The most common type of chart is the bar chart. It gets its from the fact it is shaped like a bar. There are 4 basic components of a bar chart.
A Daily Bar Chart is comprised of:
1 -The highest price of the day
2 – The lowest price of the day
3 – The opening price of the day
4 – The closing price of the day
The timeframe or period of gold price charts can be anything from a tick chart, a 5 minute chart, a daily chart, etc. This allows for a wide variety of trading scenarios, from scalping to long-term investing.
So what is so great about using charts when looking to profit in the gold market? The answer is perspective. You see charts allow us to see at a glance how all the prices relate to one another. Without perspective it would be difficult to determine whether the market was trending or not. If I look at my monthly gold chart right now I can see that gold has been making new highs again and again and again. From this simple observation even a novice trader can tell that gold is in a very strong uptrend.
By using the power of charts to determine trends we have the opportunity to profit from the momentum of the prevailing trend. Some countertrend traders may use charts to anticipate a trend reversal and profit from a potentially strong and swift move in the opposite direction.
What ever your trading or investing style or objective gold price charts are an absolute must for determining and subsequently profiting from strong directional movements.