Learn with ETMarkets: How to leverage parabolic SAR indicators in gold and silver trading

economictimes.indiatimes.com:

Stop and Reverse (SAR) indicator is a powerful tool used by traders to identify potential trend reversals in the price movements of MCX gold and silver contracts. Unlike traditional indicators that follow price trends, the SAR indicator is unique in that it dynamically adjusts its position relative to price, making it particularly effective in spotting changes in market direction. In this article, we'll explore how traders can use the Parabolic SAR indicator to identify trend reversals and execute entry and exit setups in MCX Gold and Silver trading.
Understanding the Parabolic SAR Indicator

The Parabolic SAR indicator consists of dots that appear above or below price candles, indicating potential trend reversals. When the dots are below prices, it suggests an uptrend, while dots above prices indicate a downtrend. As the price trend accelerates, the distance between the dots and prices increases, reflecting the indicator's sensitivity to changes in market momentum.
Trading entry and exit set-up using Parabolic SAR

Identifying trend reversals

Look for a series of SAR dots forming below the price candles, indicating an uptrend in MCX Gold or Silver. Monitor the SAR dots as they begin to move closer to price, signalling a potential weakening of the uptrend. Once the SAR dots switch from below to above price, it suggests a trend reversal from bullish to bearish, signalling a potential entry point for short trades.

Entry set-up for short trades:

Wait for the SAR dots to appear above price candles, confirming the