Metals Trend Line Break

After metals price has moved in a specific 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 metals trend line has been broken.

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

Up Metal trend Reversal

When metals price breaks-out upward line (support) the metal market will then move down

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

Down Metal trend Reversal

When metals price breaks-out downward line (resistance) the metal market will then move up

Downward Channel break

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

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

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

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

Another tip is to wait for the metals trend line to be broken & for the metal market to close above or below it so as to confirm this metals trading signal.

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

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

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

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

Combining With Double Tops or Double Bottoms Metals Chart Patterns

A good trade set up to combine this metal trading setup with is the double tops and double bottoms metal patterns. Read Double Tops & Double Bottoms Chart patterns Guide.

This setup should already have formed before the metals trend break signal. Because these double tops and double bottoms are also reversal metal signals, then combining these 2 setups will give the trader a good probability of avoiding a metals trading whipsaw.

In the above chart screenshots these metals trading setups can be confirmed to have formed even before the reversal metals trading signal popped up.

First Examples of Upwards Direction Reversal - the Double tops chart pattern had already formed before metals trend break trading signal appeared on the metals chart.

Second Examples of Downward Direction Reversal - the Double bottoms metals trading pattern had already formed before metals trend break trading signal appeared on the metals chart.

Double Tops or Double Bottom Combined With other Reversal Trading Signals