5 indicators to analyse gold & oil trading charts

Have you ever entertained the idea of trading gold or oil?

Both commodities are a great option of trading; they are more stable in general compared to other markets including CFDs and crypto. What’s the best way to trade these two commodities? Stick around, we have compiled a thorough guide that explains how to analyse gold and oil charts to maximise your chances of making successful investments.

Let’s jump straight in.

Key takeaways of the article:

• How to analyse gold and oil trading charts
• Pros and Cons of trading gold and oil
• Interesting facts about gold and oil
• 5 indicators to analyse gold and oil 

What you should know about gold and oil

These are common trading products.

They are tangible products and you can invest in them in different ways. For example, you can buy gold bars or invest in gold companies. Likewise, you can trade oil itself or purchase stocks of oil companies.

This makes the two products beginner-friendly. If you have little or no experience in trading commodities, we highly recommend you cut your teeth with at least one of these.

Interesting facts about gold: 

• Many turn to it when the economy is crushing: As the value of the local currency goes down, the price of gold remains stable and this makes many to invest in gold.
• Different factors affect its price: Central bank policies, geopolitical wars and the global economy have an effect on it.
• Different products in your portfolio: Experienced investors invest in it to hold various products which is a smart way to reduce the level of investment risk.

Interesting facts about oil: 

• The United States is the leading producing country: The USA produces 14 million barrels of oil per day.
• The oil and gas industry is lucrative: If you land a job in the oil and gas industry you’ll be making good money. The average wage in 2018 was $90,000.
• Hold various products: Much like gold, oil is another great option of holding various trading products such as stocks and crypto to reduce risk.

What are the most popular trading products in Nigeria?

There are many options for Nigerians investors which can prove to be profitable.

Let’s talk about those the majority is into.

1. Stocks: These are some of the most popular as many Nigerians have access and they see investing in stock lucrative. A simple beginner-friendly tactic is to buy when the price of a stock is low (which typically means many investors look to get rid of it) and sell when the price goes up again.
2. Real estate: This is another excellent option for not only Nigerian investors but also foreigners who see the potential of the African country. Certain areas have been developed in the country in the last decade which inevitably drives the price of land higher almost every year.
3. Mutual funds: It’s popular as it’s another beginner-friendly option; you don’t need to do research on the products you’re going to invest as other investors do the heavy work for you and then you share the profits with them.
4. Commodities: This is becoming increasingly popular as it’s another great option for newbies. Simple to understand with little investing jargon that sounds confusing. More specifically gold and trade are common choices when it comes to investing in commodities.

This is what Oluwatosin Olusanmi, the Commercial Director of Exness in the Nigerian market has to say about investing gold and oil in Nigeria:

“Gold is one of our most traded financial instruments and it will also be a key product in driving local operations; we will also place heavy emphasis on oil. Our core differentiating factor is our trading conditions. We keep spreads low even in times of high volatility, 80 percent of client orders are executed in less than 25 milliseconds and occurrences like slippage are extremely rare. We offer swap-free accounts for everyone, instant withdrawals and a trading environment which is free of friction. As a result, our brand is associated with reliability, transparency, and superior pricing and execution.”

Exness with over 500,000 happy clients offers a variety of different commodities you can trade including gold and oil. Its user-friendly platform and commitment to security and transparency sets them apart from other brokers.

5 Indicators to Analyze Gold & Oil Trading Charts

Have you ever used indicators to analyse gold and oil trading charts?

They help you make trading decisions faster.

And they can make your life easier.

Let’s have a look.

1. Moving Average Convergence Divergence (MACD)

MACD is an excellent indicator to perform technical analysis; it alerts traders for possible price changes in the strength, momentum, direction and time length of an emerging trend in commodity investing. To calculate this indicator, you should use short-term and long-term close positions.

2. Relative Strength Index (RSI)

RSI is another momentum indicator that can help you draw important conclusions. In plain English, the Relative Strength Index measures the magnitude and speed of a change in price to assess whether the price of gold is overvalued or undervalued at a specific moment. This is a valuable insight to take advantage of and buy or sell your assets and maximise your profits.

3. Gold Market Sentiment

The Gold Market Sentiment or Investor Sentiment is one of the most important gold indicators. It measures how optimistic or pessimistic the average gold investor is which is crucial, considering that investors many times decide based on their emotions instead of logic. The moment you hear that traders aren’t that optimistic about gold or oil, you become sceptical and have second thoughts on investing.

4. Moving Average

This is another simple yet pretty effective indicator to use and draw conclusions that are going to help you make more accurate predictions about gold and oil prices. A sharp increase or drop of the price can result in misleading data, making many assume that this one-off sudden change is going to be the norm from now on. This is when the Moving Average comes in handy with an average of the moving low and high closing to alleviate to help you have a clearer picture about the real price of gold and oil.

5. Bollinger Bands

Much like the Moving Average, Bollinger Bands help investors get a clearer understanding of oil and gold prices. There are two Bollinger Bands: one low and one high. Simply put, they look like boundaries of the Moving Average indicating an expected low boundary and expected high boundary of the price – a simple yet effective tool to form an objective opinion on the market and assess whether to trade gold, oil or another commodity.

How to analyse gold and oil charts?

Here’s a crucial step, the one that separates the amateurs from the real pros.

Do you know how to analyse gold and oil charts?

It’s good to trust your gut to trade, but it’s way much better when you combine it with data analysis.

This is done by analysing charts with past performance that helps you draw important conclusions about the fluctuations in price.

Let’s go over three tips on how to analyse a chart the right way:

1. Find the long-term trend: Probably your first job is to identify the trend? Is the price going up in the long run? Is it declining? Find which one is it, try to notice periods of the year that might rise or drop. This is going to give you an overall perspective on how the price of gold and oil move.
2. Identify when the trend is going to change: Most of the time the trend is bearish (which means it’s going down for quite some time) while then it reaches a point that changes and becomes bullish (the price keeps going up for a certain period of time). Notice when it changes from bearish to bullish; chances are it’s going to stay this way. Take advantage of it and invest before the price hits a plateau.
3. Keep up with the current affairs: As already mentioned, the global economy, the inflation of a country and the breakout of a war are aspects that have an effect on gold and oil prices. What has to do with analysing charts? It’s less related to chart analysis, but it’s also a crucial step to get the big picture of how the price of gold and oil change over time. This way you’ll be on top of any upcoming changes that might affect your profits or losses of your investments.

Alternative commodities to consider

Do you want to expand after trading gold and oil?

We’ve got you covered.

Let’s go over a list of other great commodities you should consider investing to build a portfolio with many commodity products:

• Grains: Corn, Soybeans, Soybean Oils, Wheat
• Softs: Coffee, Cotton, Sugar
• Metals: Silver, Copper, Zinc, Nickel, Aluminium
• Livestock Lean Hogs, Live Cattle

Nigeria produces many of these products; this makes it easy to become familiar with how to grow, produce and sell these products. The process makes a difference to understand how the demand and supply works on a higher level. This way, you can make more accurate predictions about the direction of the price.