Free guide
How to read XAUUSD (gold) charts
A plain-English guide for beginners from the TP Trading Partners team. Read gold in three steps: direction, zones, candles.
1. What XAU/USD means
XAU is the code for gold and USD is the US dollar. The XAU/USD price is how many US dollars one troy ounce of gold costs. When the chart goes up, gold is getting more expensive in dollars; when it goes down, it's getting cheaper.
Because the price is quoted in dollars, news that moves the dollar often moves gold too. That's one reason gold can move fast.
2. Reading gold candles
Each candle shows four prices for its time period: where price opened, the highest point, the lowest point and where it closed. A rising (bullish) candle closes higher than it opened. A falling (bearish) candle closes lower than it opened.
The thick part is the body, between the open and the close. The thin lines above and below are the wicks: they show the highest and lowest prices reached. Long wicks tell you price went there but couldn't stay.
3. Market structure: which way is gold going?
Look at the swings. In an uptrend, gold makes higher highs and higher lows: each push up goes further than the last, and each dip stops above the previous dip. In a downtrend, it makes lower highs and lower lows.
Start every chart by asking this one question. Trading with the structure, not against it, is the base of every setup in our lessons.
4. Break of structure
A break of structure is when price breaks the pattern of the trend. In an uptrend, a close below the last higher low is a warning that buyers are losing control. In a downtrend, a close above the last lower high is the opposite.
A break doesn't guarantee the trend has turned, but it tells you the old picture may no longer be true.
5. Support (demand) and resistance (supply) zones
A support or demand zone is an area where buyers stepped in before and pushed price up. A resistance or supply zone is an area where sellers pushed price down before. Mark them as zones, not exact lines — price rarely turns at the same cent twice.
When price breaks through a zone, its role can flip: old resistance often becomes new support, and the other way round. Traders call the return to that level a retest.
6. Liquidity sweeps
Many traders put their stops just under equal lows or just over equal highs. A liquidity sweep is when price briefly dips under those equal lows (or above equal highs), triggers those stops, and then closes back inside.
The wick that pokes through and the close back above are the clue. It's one of the reasons we place stops where the trade idea is wrong, not just where everyone else does.
Putting it together
- Direction: higher highs and higher lows, or lower highs and lower lows?
- Zones: where have buyers and sellers reacted before?
- Candles: what is price doing at that zone right now?
Whatever you do, decide where your idea is wrong before you enter, put your stop there, and only take trades where the possible reward is clearly bigger than the risk.
Risk warning: trading gold and forex carries a high level of risk. This is education, not financial advice. Never risk money you can't afford to lose. This guide is general education and not a personal recommendation.