Add Trend Line on XAUUSD Chart

Sometimes support & resistances are formed diagonally in a similar way like a staircase. This forms a gold trend which is a sustained movement in one direction either upward or downwards.

A gold trend line depicts the points of support & resistance for the xauusd price, depending on the direction of the market. For an upward moving market it will shows the points of support & for a downward moving market it will show the areas of resistance & they are mainly used by many investors to determine these resistance & support levels.

Gold Trend-line is a straight line that connects 2 or more price points then extend into the future to act as areas of support or resistance. There are two different types: upward and downward. It is an aspect of xauusd trading analysis that uses line studies to try and predict where the next move will head to. A trader must know how to draw & interpret signals generated by this tool.

The basis of this analysis is based upon the idea that markets move in trends. They are used to show 3 things.

• The general direction - up or down.
• The strength of the current move - and
• Where future support & resistance will be likely located

If lines forms in a certain direction then market usually moves in that direction for a period of time until a time when it's broken.

Plotting these on a gold chart shows the general gold trend of the xauusd market which can either be upwards or downwards.

Shown Below is an example of how to draw these on charts

Course: How to Draw and Trade Upwards Move

Course: How to Draw & Trade Downwards Move

The MT4 software provides charting tools for drawing these on gold charts. To draw them onto a xauusd chart, investors can use the tool provided on the MT4 software that is shown below.

To draw on this on a gold chart just click the drawing tool above on the MT4 technical analysis software and select point A where you want to start drawing and then point B where you want the it to touch. You can also right click on the trend-line & on the properties option select the option to extend its ray by ticking the "ray check box", if you do not want to extend it, then uncheck this option in your gold trading platform. You can also change other properties such as color and width on this property pop up panel of the properties. You can download MT4 software & learn technical analysis with it.

The gold trend is your friend. Is a popular saying among investors because you should never go against it. This is the most reliable method to trade Gold because once prices start to move in one direction they can continue to move in that particular direction for quite some time - therefore using this method presents opportunity to make profits from the xauusd trading market.

Principles of How to Draw

1. Use candlestick charts

2. The points used to draw are along the lows of the xauusd price bars in a rising market. An upwards bullish move is defined by higher highs and higher lows.
3. The points used to draw are along the highs of the xauusd price bars in a falling market. A downward bullish move is defined by lower highs and lower lows.
4. The points used to draw are extremes points - the high or the low xauusd price. These extremes are important because a close beyond the extreme tells investors the gold trend might be changing. This is an entry or an exit signal.
5. The more often a trend-line is hit but not broken, the more powerful its trading signal.

There are two main ways of trading this gold trading setup:

1. The Bounce
2. The Break

Technical Analysis Methods

The bounce is a continuation signal where xauusd price bounces off this line to continue moving in the same direction. In a downward move, the xauusd market will bounce downward after hitting this level which is the resistance level. In an upward move, the xauusd market will bounce upwards after hitting this level which is the support level.

The break is a reversal signal where the xauusd market goes through the line and starts moving in the opposite direction. When an up gold trend is broken then the sentiment of the xauusd market reverses and becomes bearish and when a down gold trend is broken then the sentiment reverses and becomes bullish.

For very strong trends, after this break signal, the xauusd price will consolidate for some time before heading in the opposite direction. For short term trends then this break signal will mean xauusd price may reverse immediately.

In gold trading analysis, both the bounce and the breaks-out that are used in technical analysis charts are based upon these levels being support & resistance.

Entry, Exit and Setting stops:

This method used to determine good entry and exit points, protective stops are placed just below them. The bounce is a low-risk entry method used by traders to place entry trades after xauusd price has retraced. Trades are setup along these levels and a stop loss placed just above or below.

The gold trend-line break is a crucial technical indicator of possible Gold reversal. When a the its broken the xauusd price starts move in the opposite direction. This provides an early exit signal for investors to exit their open trades and take profits. When there a penetration of these levels, it is a signal that the xauusd price can begin heading in opposite direction.

Unlike other technical analysis indicators there is no formula used to calculate it, this pattern is just drawn between two chart points.