Welcome to Cantos Charts Masterclass. I'm Sandy Jadeja, Chief Technical Analyst for City Index.

Again, welcome to another lesson in how to use technical analysis and chart patterns. As always, this is simply for information purposes and educational purposes only.

Now, I'd like to take a look at what we've learnt over the last few lessons and apply that to current market moves. So we'll use technical analysis and chart patterns to take a look at one of the markets that a lot of people are focusing on right now. We'll take a look at moving averages, support and resistance, candlesticks and various other elements to give us an idea as to what the market might be doing or what clues it might be providing.

Now this here is the weekly chart of gold. The first things we need to look at is what is the most obvious thing that stands out. Clearly, this market has been moving towards the upside. Is it trading above or below its 20 period moving average? This particular market is trading above its 20 period moving average. We cleared the $1,051 high, the March '08 high which was quite a significant high because it had various attempts of breaking above that. Now of course we've taken that out. We also tested that on the downside just at this point over here and of course, the market has held that and then traded towards the upside.

So what's next? Well, again, we've talked about the importance of round numbers and for gold $1,250 on a weekly basis has been tested several times. Currently speaking, the market has trading back above there, managed to close above that level, although it has poked head back down below this key level here. Above the $1,250, we have the all time important round number $1,300. So if gold prices continue towards the upside and it can sustain $1,250 that would suggest that there is still a $50 move towards the upside that might be worth taking the risk for depending on how much risk we want to initiate and of course, depending on the chart patterns that are available at the time. So, so far, it's above its 20 period moving average. We seem to be holding the $1,250 area with a potential approach to the $1,300 level.

Now, in this example here we are looking at the weekly chart but again, what I've done is to take away some of the other elements and see what else we can figure out from what's happening in the markets.

Several times the market had traded towards the downside and of course the bears would have come along and said this market has probably made a top and we're heading lower. But in actual fact, what it has been doing is providing what we call bull flags. That's a continuation pattern. So in this particular market here we've seen quite a few bull flag. The market has acknowledged that and continued towards the upside.

What about in terms of the candlestick patterns? Are there more red bars or blue bars? Clearly, there are more blue bars suggesting that the bulls are in control. So again, we have a bullish bias on this particular commodity.

Now, here we are looking at the weekly chart again and we seem to be trading above the parabolic SAR. So that's suggesting that that's quite a good upwards move as well.

So everything so far is pointing to a bullish market, but does that mean we just jump on board? Does that mean that we're going to take the position right now and head towards $1,300? No, because there are other factors to consider. We want to look at the lower timeframe in order to give us a better position to see if we can enter this market. So from here, for example, on this particular chart here, we are looking at the daily chart. Now also, the commodity is trading above its parabolic SAR. We seem to have had two new highs on the daily chart, but the stochastic indicator is showing a divergence pattern. In other words, the indicator is moving down while price is moving towards the upside and we're also very closely trading towards the parabolic SAR. Does that suggest that we might be approaching weakness in price? Possibly, yes. Is this a good time to possibly get bullish right now? Maybe not. Maybe we should wait for some more confirmation. Maybe a breakout above the highs. Maybe a move away from the parabolic SAR.

So the idea here is to use two timeframes, use various elements of technical analysis, to give us a better picture and hopefully a better risk profile of where to enter the markets.

So the key questions to ask again, is the market trading below or above the 20 period moving average, are there any key support or price resistance levels nearby and what is the current pattern telling us both on the weekly and the daily timeframe and of course, pay attention to the parabolic SAR because that seems to be quite a useful and a favourite indicator amongst technical traders.

I hope this lesson has been useful for you. I look forward to seeing you in the next lesson. We will observe a few more markets using technical analysis. Have a great trading week. This is Sandy Jadeja.