In this article, I am sharing my personal experience to trade Gold - XAUUSD. I am using RSI Indicator to check the divergence between price and indicator.
I am using 5 minutes time-frame to check the divergences, order blocks and other price action levels and hints to take the best trades.
Trading Gold - XAUUSD is not very easy but is possible to get huge profit after much practice on the Demo Account.
The Demo Account must be the same size, which you will start from your Real Account size in future.
I mean to say that, you have to start the Demo Account of same worth, which you have decided to open with your Real Amount after practice and becoming successful on that Demo Account.
You must double your Demo Account so many times, after that you will be able to work best on your Real Account.
Now I am sharing my analyzed picture, in which I have marked some important points, saw some divergence and hints by RSI Indicator, from where we can take best trades in Gold - XAUUSD and can get huge profit.
See the following picture and I will discuss the points mentioned in this picture later on this article.
See clearly the above picture, as Gold - XAUUSD market opens at about 03:05 AM on the 1st April, 2024, market was showing the Overbought situation started at that time, you can see clearly the green filled area was made.
On the same date, at about 05:40 AM, market again showed another green filled Overbought area, and finally third time, at about 09:00 AM market showed another small green filled Overbought area.
I have observed in the Gold - XAUUSD market, approximately 3 times, gives hint of Overbought after that, it gives a good reversal trade from buy to sell.
When the Overbought condition happens according to RSI?
An Overbought situation happens, when the prices are traded above the 70 Band at the RSI Indicator.
There are mostly 3 bands are used in this indicator.
1. 70 Band
2. 50 Band
3. 30 Band
Now I am giving the particular cut area of the above picture for your detailed view to observe what I am talking about.
What is the exact price level to take the Sell trade now?
Whenever we see the above type of divergence between price and indicator, now the question arises that what would be the exact time or price level to take a sell trade?
Simply when we see the price moves below the 70 Band, we have to take sell trade, we must check any swing level, bearish engulfing candle, evening star pattern to the downside first before taking any trade.
We can see clearly in the above picture, there is a bearish engulfing candle, after the test of this engulfing candle, we will take a sell trade.
Here you can see there is also FVG - Fair Value Gap or Imbalance, which market will definitely fill that which the market came to fill, then it gave the sell trade.
The Stop Loss would be set above that engulfing candle.
What would be our Take Profit - TP after taking this sell trade?
Now we have taken a sell trade after looking all the confirmations and divergences, now the question arises here, what would be our next price level for Take Profit?
Gold - XAUUSD market structure, which I have observed always plays on its previous structure levels, order blocks, resistance becomes support.
Now I am showing in the following picture, TP was hit on the previous structure level, which was a small resistance level or we can say it swing level.
Market exactly reached there and moved up again.
See the following picture to understand what I am talking about:-
After giving this precious sell trade, market intended to give some retracement to the above side, means we can see a small buy trade.
What I mean small buy trade, if we will think the long buy trade, we will loose out money because at this time, the market has got reversed from buy to sell, so we must see sell not buy.
Here we have the clear divergence between price and RSI Indicator called Divergence No. 2.
I am showing this divergence to view clearly in the following picture.
What would be our Take Profit - TP of this 2nd small buy trade?
Now we have taken this buy trade after getting hint from RSI Indicator, we have to get help from Fib Retracement tool.
We will plot this tool from top to bottom level where from we took the 1st Sell trade, then we will get the retracement level.
We will set our TP of this buy trade upto 50% to 61% level of Fib tool.
To understand well, you can see the clear TP level in the following picture.
You can see clearly the market has reached exactly on the 61% of the Fib Retracement level and we can also see there is an order block level too, so in this way, I decide to take profit.
Now lets talk about the 4th sell entry. Now I am sharing a detailed picture below and then will talk about that soon.
You can see the price gave this sell trade exactly from less than 70 Band, here I am showing more close picture, the level where from the selling started.
See in the following picture the close view of the Divergence Rule in the Indicator window.
You can see clearly that, when price returned from 69.76 Band level, it gave the perfect sell entry.
For detailed RSI Divergence, I will make a complete article on it.
What would be our Take Profit - TP of this 3rd Sell trade?
Now lets see what would be our next profit level. We know that at this stage, the price has completed its retracement, now we will see the next take profit level of this sell entry.
At this stage we have an order block level on the 2220.000 and before that, there is an FVG - Fair Value Gap also available.
Whenever, we see such type of situation, then we should always get the profit upto half of filling that FVG.
There is not necessary that market will fill whole the FVG till the order block.
I have observed so many times in the Gold - XAUUSD market, that price returns back after filling just half FVG.
In this situation market performed the same trick and returned back from the half of the FVG level.
In the small time-frame of 1 minute, there is an order block from where the market returned back.
So we had to take our TP on that level. It is said that there is something better than nothing.
In the following picture I am showing the TP level for this sell trade.
See the bigger view of 1 minute Order Block, where the price reached and returned back.
Now we will talk about the Divergence No. 3 and Divergence No. 4, which I showed in the first picture, where I have mentioned all the divergences.
You can see there are 2 divergences in the following picture 3 and 4. And we can clearly see in the indicator windows those divergences are available.
3rd divergence gave the buy trade and 4th gave the sell trade. Now viewing the following picture you must have the good understanding about the concepts discussed in this whole article.
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