How Do I Trade Price Breakout in Gold Trading?
How Do I Trade Price Breakout in XAUUSD Trading?
With consolidation patterns the market can head in any direction after a price break-out. Consolidation chart patterns are used to spot breakout patterns in charts. There are two different types of consolidation patterns that form on charts:
- Symmetric Triangles - Consolidation Patterns
- Rectangles - Range Gold Setups
Consolidation Chart Setups
Symmetric triangles are chart patterns with converging trend lines that form a price consolidation period that signals there's going to be a price break-out in one direction after this chart setup breaksout in one direction. The buy trading signal from a consolidation triangle pattern setup is the upside price break out, while a down-side price break-out is a sell signal. Ideally, a the price breaksout from a consolidation setup prior to reaching the apex of the triangle.
Trend lines trend lines can be drawn connecting the lows and highs of the consolidation pattern for the price, the trend lines formed are symmetric & converge to form an apex of a triangle - consolidation triangle pattern. A xauusd price break-out should occur somewhere between 60 % - 80 % into the triangle consolidation setup. An early or late gold breakout is more prone to gold whipsaws, and therefore less reliable. After a price break-out to one side the apex of the consolidation triangle chart setup forms the support and resistance areas for the price. Price that has broken out of the consolidation setup shouldn't retrace past the apex. The apex level is used as a stop loss setting level for the open trade transactions placed after a price break-out.
When consolidation gold setups form we it signals an impending xauusd price break-out once price breakout and moves out of this consolidation chart pattern - How Do I Trade Breakouts in XAUUSD - Trading XAUUSD Identify XAUUSD Break-out Setup - XAUUSD Break-out Strategy Gold.
The consolidation patterns form when there is a tug of war between buyers and sellers and the market can't decide which side to move.
Consolidation Patterns - How Do I Trade Breakouts in XAUUSD - Trading XAUUSD Identify XAUUSD Break-out Setup
However, this consolidation setup cannot go on forever - the chart example below portrays how the consolidation setup eventually had a price break-out and moved in one direction.
Trading XAUUSD Identify XAUUSD Break-out Setup - Gold Break-out Strategy XAUUSD - Gold Breakout Trading Method
Trading XAUUSD Identify XAUUSD Break-out Setup - XAUUSD Break-out Strategy Gold - Gold Breakout Trading Method
After price consolidating, If price breaks out the upper line this is a buy signal, if price breaks the lower line this is a sell trade signal.
Rectangle Setup
A rectangle consolidation setup is a trading range with a narrow price action that develops into a consolidation period phase in market. The gold range is defined by 2 parallel trend lines which are horizontal and these indicate the presence of support levels and resistance zones at this particular area. Rectangle consolidation pattern is drawn on a trading chart using a rectangle, therefore, the name gold rectangle chart pattern.
For this xauusd consolidation chart pattern, xauusd price forms a series of highs and lows which can be linked with horizontal trend lines that are parallel to each other. Rectangle consolidation setup occurs over an extended period of time giving this pattern setup its rectangle shape.
A breakout of price action from the rectangle consolidation setup forms when either of the horizontal line is penetrated and the gold range of the rectangle pattern setup is broken. An upside price break-out is a buy trading signal. A downside price break-out is a sell trade signal.
How Do I Trade Breakouts in Gold Trading
Price Breaks Out of rectangle consolidation range after a period of time & price continues to move upward after an upward price break-out.
Trading XAUUSD Identify XAUUSD Break-out Setup
Interpret and Trade Price Breakout in Gold Trading?
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