How Do I Trade Trend Line Break Reversals?
After the price has headed in a specific direction for an extended period of time within a channel it gets to a point where the price stops moving within this channel. When this happens we say that the trend line has been broken.
Since this line is point of support/resistance then we expect the market to move and head towards the in the opposite trend price trend direction. When this happens traders will close the trade orders that they had bought or sold. This is referred to as taking and booking profit.
XAUUSD Upward Trend Reversal
When price breaks upwards trendline - support zone - the price then will move downward.
Trade Trend Line Break Reversals in Gold Trading?
This trend-line break signal is regarded to be confirmed with the setup 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 trend line is broken.
XAUUSD Downward Trend Reversal
When price breaks downwards trendline - resistance zone - the price then will move upward
Trade Trend Line Break Reversal Gold Setups
This downwards trendline reversal signal is considered to be confirmed with the formation 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 direction. Either way it is always good to take profit when the trend reverses.
To trade this gold tend line reversal setup as a trader once you open a new trade in the direction of the trend reversal price should immediately head in that market direction - in a price break out manner. This means the price should immediately start to head in that direction without any much resistance.
If on the other hand the price does not immediately head in direction of price break out then it is better to close out the open positions because it means that the ruling trend is still holding.
Another gold tip for traders is to wait for the trend line to be broken & for the price to close above/below the trend line so as 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/below the trend line, based on the direction of price.
- Upwards Trend Market Direction Reversal - this reversal signal is confirmed once the price closes below this upwards trend line, this time should be the right 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 downward trendline, this time should be the right time to open a buy trade, so that you avoid fakeouts.
How Do I Trade Trend Line Break Reversal Trading Signals
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