Hello and welcome to CantosCharts Masterclass. I'm Sandy Jadeja, Chief Technical Analyst for City Index and welcome back to another lesson in technical analysis. As always, these are simply for information and education purposes only.

I want to take a look at a market which has caught some recent attention because of the moves that we've been seeing, so we're going to be looking at the commodity markets. And today we're going to talk about gold. So have a look at this.

Recently we discussed gold, quite a few weeks back, so have a look at the video lesson online. And we noticed that there was something interesting going on with gold and we were looking for a pullback and we did actually see that pullback. And since then gold prices have stabilised and guess what, it's shot right back towards the upside in line with some of the other commodities out there.

So how could we have traded it? That's the key question for today's lesson. First thing here, we have converted this to a candlesticks chart. We discussed this three drives to the top pattern previously and I said that there's a potential for a bearish move. And that's exactly what we had seen. Gold prices declined. And since then it stabilised, gave us a clue that potentially the move towards the downside may be over and then it's rocketed back towards the upside.

So what's that clue? Straightaway we notice that there was a spinning top followed by a bullish engulfing pattern. Now either of those two patterns we could have traded the breaks towards the upside because both the spinning top would have given you an indecision point, but the bullish engulfing would have given you a clear signal to say this body has engulfed the previous candlesticks body, there's a potential move towards the upside, how do we position ourselves for that.

Really simple. You put a buy stop above the break on the high side and you put a stop on the lower back candlestick. And since then gold prices have actually gone higher. Take out the recent highs and it looks like it's back in its bullish mode again. So well done, if you've been trading on the long side for gold prices.

So here is the parabolic indicator. We always look at the parabolic indicator because it's simple, it's available on most software packages and you can utilise it. So why not use it in your analysis? And also it gives you very good reference points to where to place your stops and of course where to put your buy and sell orders.

So here at the moment we can notice that the parabolic indicator has been broken towards the upside. We want to trade this on the long side, as long as the lower side of the parabolic indicator has not been violated. So what I'd advise you to do is look at your charts, look at the longer term charts and then look at the short term charts for entry and exit.

So here this is the monthly chart and you'll notice that for a very, very long time gold prices has been trading above the parabolic indicator. So really this is still a bull market and the talk about gold prices getting to $2,000, it's possible. I recently heard people saying is it possible for it to get to $5,000. I don't know if it's going to get there. As long as this market continues its uptrend we want to be trading on the long side and look at the shorter term time frames for your exit points. So right now as far as I'm concerned, gold is still bullish until we see clear reversal patterns on the monthly charts.

Now here we have the daily chart, so if you're a short term trader, the same principles apply. You'll notice here that the parabolic indicator has been broken after we saw some congestion on the lower side and since then gold again, as I said previously has moved towards the upside. So the parabolic indicator is resting around the 1,400 level on the daily charts. As long as gold price on a short term basis does not break below 1,400, let's see how far these prices can go. So at the moment we would want to maintain our long position.

So again as always use the multiple time frame basis to look for trends and then entries and exits and then use candlestick patterns to assist to find these key reversal points and of course use the parabolic breakout. You can of course use the moving averages as well and various other indicators that we have talked about here at Cantos.

I hope this has been useful for you. In the meantime, have a great trading week. This is Sandy Jadeja.