Covering a chart with lines might look scary to beginners, but they’re essential tools to understand and master. The books tell you that Indicators are statistical methods used to forecast potential future movements of an asset's price, based on historical price patterns and volumes. The right indicators can help you make more informed decisions, potentially leading to more successful trades.

However, what technical analysis also gives you, is a window into the collective thoughts of the market! It helps you identify pockets where there was previously a lot of demand for a stock (or commodity). It shows you when people got over-excited in the past, and got their fingers burnt trying to be too greedy, perhaps taking a stock above where it's true value stood.

Unlike some, I don't believe that technical analysis should be used on its own. To me it feels like an excuse for not doing the necessary work on learning the fundamentals, or studying the economy for clues about future growth.

However if you use the two in conjunction with each other, it can greatly enhance your trading strategy, and give you warning signs around your entry level. Or at the very least it should give you guidance on where to set your stop loss, and levels where you want to take profit.

Below we are going to look at three of the more basic technical analysis techniques. However if these are to your liking, then there are hundreds more on the web to get stuck into. And of course, you can even create your own to suit your own trading philosophy and view on investor psychology.

1. The Relative Strength Indicator, or RSI, is a momentum oscillator that measures the speed and change of price movements. 

The RSI oscillates between zero and 100, and can help identify when gold is overbought or oversold. Think of it like a traffic light; if the RSI is below 30, it's like a green light indicating go, suggesting gold is oversold. Conversely, an RSI above 70 is like a red light, indicating stop, but in this case, it means gold might be overbought.

Using RSI smartly can really enhance your trading strategy. For instance, if you're considering buying gold but the RSI is above 70, it might be wise to wait. A value below 70 is generally more favourable. Remember, while this might mean missing out on some opportunities, it's all about improving the quality of your trades.

2 . The 50 and 200 day Moving Averages

As an indicator, Moving Averages are beautifully simple yet effective. They smooth out price data to create a single flowing line, which makes it easier to identify the direction of the trend. 

There are several types of Moving Averages, each with its own strengths. The Simple Moving Average (SMA) calculates the average price over a specific time period. 

One of the primary uses of Moving Averages in trading is to identify the direction of the trend. When the price of gold for example is above its Moving Average, this is typically seen as a bullish signal, whereas if it's below, it's considered bearish. Traders often watch for crossovers between short-term and long-term Moving Averages as signals of potential trend reversals. For example, a crossover of a 50-day going up through the 200-day Moving Average is known as a golden cross, and can indicate the right time to buy. However, it's crucial to remember that in a sideways or consolidating market, Moving Averages might lead to false signals.

Another important aspect of Moving Averages is their role as dynamic support and resistance levels. In a bullish trend, the Moving Average can act as a support level – a floor that the price seems to bounce off. Conversely, in a bearish trend, it can act as a resistance level – a ceiling that the price struggles to break through.

3 . Bollinger Bands (Yes, just like the Champagne!) measure market volatility.

Bollinger Bands consist of three lines: the middle line is typically a simple moving average, while the upper and lower bands are standard deviations away from this middle line.

When the bands widen, it indicates an increase in market volatility, suggesting that traders should expect larger price movements and potentially more trading opportunities. Conversely, when the bands contract, it signifies a decrease in volatility, indicating that the market is in a more stable phase.

Bollinger Bands can be used in various trading strategies. One popular approach is the 'Bollinger Bounce', which is based on the idea that prices tend to return to the middle band. Traders might buy when the price touches the lower band and sell when it reaches the upper band, expecting the price to bounce back to the middle.