Hello and welcome to Cantos Charts Masterclass. I'm Sandy Jadeja, Chief Technical Analyst for City Index. Welcome back to another lesson in technical analysis and chart reading. As always, this is simply for information and educational purposes only.

Well we're going to dive right in because the markets have really started to heat up and a lot of people have been emailing in asking if we can continue to look at the recent markets that we've kept an eye on. So in this session what we're going to do is take a look at gold and we'll be using classical technical analysis.

So straight away what do we see on the daily chart? That's a nice move towards the upside and it appears that nothing is getting in the way for the price of gold.

Now if you remember in previous lessons we did talk about the psychological round number of $1,300 and clearly, gold has gone past $1,300 on the December contract and of course we're at the mid-psychological level which is $1,350.

So how much further is this market going to continue? In other words, is there going to be a reversal? Well we'll take a look at this market right now.

The first thing I want to do is remember I've always told you to look at multiple timeframes. So on the weekly chart, what we see is every time we've seen a pull-back, these have been fairly shallow in the recent uptrend.

Previously, we did see a fairly steep decline but since then we have seen smaller declines, so these are good buying opportunities. These are classical bull flags and you can look back in previous lessons to understand how we trade bull flags.

So going back to the parabolic moves which we discussed as well you can see that once the upside of the parabolic has been broken out we have had a very nice steady move. Now it does seem a little bit extreme, so there might be some caution required here. In other words, you might want to tighten up your stocks because when you start seeing spikes towards the upside you can also start seeing dramatic moves towards the downside.

Now here, this is the daily chart, and you'll notice by the arrows as indicated is once we had broken on the upside of the parabolic that was your key to start getting, or initiating long positions and we've had very nice set ups there with the parabolic and the markets have continued to the upside.

We've had a few false breakouts on the parabolic move. Back in the middle of the session you can see that there was a forced move towards downside, a sharp spike and then suddenly the market reversed quickly back towards the upside.

So once again the parabolic is a very, very useful indicator. I do like this and especially when you get extreme moves these can be very useful as stop levels.

Now the candlesticks are always very useful to us as well. In a previous lesson I did say that there was a little bit of a concern. We had a spinning top pattern in the midst of this decline especially when it was reaching a double top pattern as well.

Now the way to trade this is not just to turn bearish when we get the pattern, it's to wait for the breakout below the low. We didn't see that. In fact, we saw a continuation, so the reversal pattern ended up being a continuation pattern.

So we've always got to be cautious not to jump on board and start turning bearish, especially with moves like this. This is just a runaway train. You do not want to get in front of this. You just want to ride this as far as it goes until the market points out that there might be a reversal.

Now again, on the weekly chart, what you want to do is to look out for things like spinning tops, dojis or even bearish engulfing patterns or harami patterns. Keep it simple. Keep it really simple and wait for the breakouts towards the downside before you start initiating a short position or even exiting your long positions.

So, remember, trade with a trend and try to use two timeframes (at least two timeframes) so you trade with the shorter term timeframe and use a longer term timeframe for your analysis and pay attention to the important support and resistance levels.

So in other words, keep an eye to previous highs, previous lows, the round psychological numbers (these are always very good to look out for) and of course the parabolic SAR is useful to have. You can, of course, use the moving average as well. They're both very, very good.

Well I hope this lesson has been useful to you. If gold prices continue to rally up as we next meet we will certainly keep an eye on this in the meantime. Have a great and safe trading week.