Trade Gold Trading

What is a Trend Reversal?

Definition and Meaning of a Trend Reversal & How to Trade a Trend Reversal

In trading the trend line break signal is used to signify a market reversal setup. When a trendline is broken then it means the force of the current trend is reducing/decreasing & the current trend might reverse & start moving in the in the opposite trend market trend market trend market trend market trend market trend direction or form a consolidation chart pattern before it reverses.

Market Reversal Signal

After price has moved in a particular direction for an extended time period within a trend it gets-to a level where it stops moving within the market trend. When this occurs we say the trend line has been broken.

Since the trend line is the point of support or resistance then we expect the market to move towards the in the opposite trend market trend market trend market trend market trend trend direction. When this happens traders will close-out the open trade position that they had bought or sold. This is known as taking and booking profit.

Up trend Reversal

When price breaks-out up trendline (support) market will then move down or form a consolidation pattern before moving downwards.

How Do I Analyze When an Upwards Trendline is Broken Upwards Trendline Break Signals?

What is Upward Trend Reversal in Gold Trading? - What is a Upward Trend Reversal?

This upwards trendline break reversal signal is considered to be confirmed with the reversal pattern of lower high is formed on the price chart. This also provides an opportunity to go short once the trend line broken.

Trading Market Reversal Signal

When price breaks-out down-wards trendline (resistance) market will then move upwards or form a consolidation pattern before heading upwards.

How Do You Interpret Trading When Downwards Trend-Line is Broken Downwards Trend-Line Break Signals?

What is Downward Trend Reversal in Gold Trading?

This downwards trend-line break reversal setup is regarded to be confirmed with the pattern of a higher low is formed. This also provides a trading opportunity to go long once the downwards trend line is broken.

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

To trade this trend reversal setup as a trader once you open a new trade in the direction of trend reversal the price should immediately head in that direction, in a price break out manner. This means the market should soon move in that direction without much resistance.

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

Another tip is to wait for the trend line to be broken and for the market to close above/below the trend line so that to confirm this trend reversal.

What happens is most traders open trades waiting for reversal setup even before the ruling trend is broken, only for the price to touch this trendline & for the current market trend direction to hold & gold to continue with the current market direction.

Therefore, when trading this trend reversal setup it's best to wait until the price break out has been confirmed by price closing above or below the trend line, based on the direction of market.

  • Up-wards Gold Trade Market Direction Reversal - trendline reversal signal gets confirmed once the market closes below this upward trend line, this should be the right time to open a sell trade, so as to avoid a trade fake out.

  • Downwards Gold Trade Market Direction Reversal - trendline reversal signal gets confirmed once the market closes above the downwards trend line, this should be the right time to open a buy trade, so as to avoid a trade whipsaw fakeout.

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