Gold Trend Line Break

After xauusd price has moved in a certain direction for an extended period of time within a channel it reaches a point where it stops moving within the channel. When this happens we say that the gold trend line has been broken.

Since the line is the point of support or resistance then we expect the xauusd market to move towards the opposite direction. When this happens traders will close the gold orders which they had bought or sold. This is called taking profit.

Up XAUUSD trend Reversal

When xauusd price breaks upward line (support) the xauusd market will then move down

This signal is considered to be complete with the formation of a lower high or a lower low. This also provides a trading opportunity to go short once it is broken.

Down XAUUSD trend Reversal

When xauusd price breaks downward line (resistance) the xauusd market will then move up

Downwards Channel break

This signal is considered to be complete with the formation of a higher low or higher high. This also provides a trading opportunity to go long once it is broken.

NB: Sometimes when xauusd price breaks its gold trend it might first of all consolidate before moving in the opposite direction. Either way it is always good to take profit when the xauusd market direction reverses.

To trade this xauusd trading setup as a gold trader once you open a new trade in the direction of the gold trend reversal the xauusd price should immediately move in that direction, in a gold price breakout manner. This means that the xauusd market should immediately move in that direction without much of a resistance.

If on the other hand the xauusd market does not immediately move in the direction of the xauusd price breakout then it is best to close out the trade because it means that the gold trend is still holding.

Another tip is to wait for the gold trend line to be broken and for the xauusd market to close above or below it so as to confirm this gold signal.

What happens is that most traders open trades waiting for a reversal even before the gold trend is broken, only for the xauusd price to touch this line and for the current market direction to hold and gold to continue with the current market direction.

Therefore, when trading this xauusd trading setup it is best to wait until the breakout has been confirmed by xauusd price closing above or below the gold trend line, depending on the direction of the xauusd market.

• Upward Market Direction Reversal - this gold signal is confirmed once the xauusd market closes below this upward line, this should be the correct time to open a sell short trade, so as to avoid a gold trading whipsaw.

• Downward Market Direction Reversal - this gold signal is confirmed once the xauusd market closes above the downward line, this should be the correct time to open a buy long trade, so as to avoid a gold trading whipsaw.

Combining with Double Tops or Double Bottoms Gold Chart Patterns

A good trade setup to combine this xauusd trading setup with is the double tops and double bottoms xauusd chart patterns. Read Double Tops and Double Bottoms Chart patterns Tutorial.

This setup should already have formed before the gold trend break signal. Because these double tops and double bottoms are also reversal xauusd trading signals, then combining these two setups will give the gold trader a good probability of avoiding a gold trading whipsaw.

In the above chart screenshots these gold trading setups can be confirmed to have formed even before the reversal gold signal appeared.

First Example of Upward Direction Reversal - the Double tops chart pattern had already formed before the gold trend break signal appeared on the xauusd chart.

Second Example of Downward Direction Reversal - the Double bottoms xauusd chart pattern had already formed before the gold trend break signal appeared on the xauusd chart.

Double Tops or Double Bottoms Combined with other Reversal Gold Trading Signals