How Do You Trade Trend Line Break Reversals?
After the price has headed in a particular direction for an extended period of time within a channel it gets to a point where price stops moving within this channel. When this happens we say that the trend-line has been broken.
Since the line is point of support or resistance then we expect the market to go toward the opposite price trend direction. When this happens traders will close the trade orders which they had bought or sold. This is referred to as taking profit.
XAUUSD Upward Trend Reversal
When price breaks upward trend-line - support zone - the price will then move downward.
Trade Trend-Line Break Reversals in Gold Trading?
This trend line break signal is regarded to be complete with the formation of a lower high or a lower low on the price chart. This trend line reversal gold setup also provides a signal to go short once the trendline is broken.
XAUUSD Downward Trend Reversal
When price breaks downward trend line - resistance zone - the price will then move upward
Trade Trend-Line Break Reversal Gold Setups
This downwards trend line reversal signal is considered to be confirmed with the creation of a higher low or higher high on the price chart. This also provides a signal to go long once the trend-line broken.
Sometimes when price breaks its trend it might first of all consolidate at that level before moving in the opposite market direction. Either way it is always good to take profit when the trend reverses.
To trade this gold tend line reversal set up as a trader once you open a new trade in the direction of the trend reversal the price should immediately move in that market direction - in a price break-out manner. This means that the price should immediately start to head in that direction without any much resistance.
If on the other hand the price doesn't immediately move in direction of the price break-out then it's better to close the open trades because it means that the current trend is still holding.
Another gold tip for traders is to wait for the trend-line to be broken and for the price to close above or below the trendline in order to confirm this reversal setup.
When gold trading this trading setup it is better to wait until the price break-out has been confirmed by price closing above or below the trend-line, based on the direction of the market.
- Upwards Trend Market Direction Reversal - this reversal signal is confirmed once the price closes below this upwards trend line, this time should be the correct time to open a sell trade, so that you avoid fakeouts.
- Downwards Trend Market Direction Reversal - this reversal signal is confirmed once the price closes above the downwards trend-line, this time should be the correct time to open a buy trade, so that you avoid fakeouts.
How Do You Trade Trend Line Break Reversal Trading Signals
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