Bilateral/Consolidation Patterns Gold Trading

With bilateral/consolidation trading chart patterns the xauusd market can move in any direction. There are two different types of consolidation trading chart patterns that form on gold charts:

• Symmetric Triangles - Consolidation xauusd trading chart patterns
• Rectangles - Range market

Consolidation Trading Patterns

Symmetrical triangles are xauusd chart trading patterns with converging gold trendlines which form a consolidation period. The technical buy signal from a symmetrical triangle is the upward break, while a down-ward break is a technical sell trading signal. Ideally, a market breaks-out from a symmetrical triangle before to reaching apex of the triangle chart pattern.

Gold Trendlines can be plotted by connecting the lows & highs of the trading consolidation phase, the trendlines formed are symmetric & they converge to form an apex. A break out should happen between 60% and 80% into the triangle chart pattern. An early or late break out is more liable to fail, & therefore less reliable. After a xauusd price break out the apex forms support & resistance zones for the xauusd price. Gold Price that has broken out of the consolidation chart trading pattern shouldn't retrace past the apex level. The apex level is used as a stop loss order setting area for the open Gold trades.

When these consolidation trading chart patternss form we say that the xauusd market is taking a pause before deciding next direction to take.

These consolidation chart patterns form when there's a tug of war between the buyers & the sellers & the xauusd market can't decide which side to move.

Consolidation Pattern

However, this trading chart pattern can not go on forever & just like in a tug of war one side will eventually win, looking at the gold chart below see how the consolidation eventually had a breakout & moved in one direction. Now how do we as xauusd traders ensure that we are on the side that is winning?

Breakout Downwards Sell Gold Trade Signal after a Consolidation Pattern

Break Out Upwards Buy Gold Trade Signal after a Consolidation Pattern

Now back to our question, how do we make sure we are on side that is winning?

Well we wait til xauusd price goes past one of the lines & put buy or sell trade orders in that particular direction. After consolidating, If xauusd price breaks-out the upper line we buy, if it breaks-out out the lower line we open sell.

Alternatively if you don't want to wait out the consolidation chart pattern, you can use pending gold orders. If you-wouldyou'd want to learn more about pending gold orders go to the lesson: Stop Entry Gold Order Types

The two types of stop order types used to trade consolidation trading chart patterns are:

• Buy Entry Stop An order to open buy at a level above xauusd market xauusd price.

• Sell Entry Stop An order to sell at a level below xauusd market xauusd price.

These are gold orders to open buy above the xauusd market or to open sell below the xauusd trading market.

Rectangle Trading Pattern

A rectangle consolidation trading chart pattern is a trading range with a thin xauusd price action that forms a consolidation trading phase in gold trading market. The price range is defined by 2 parallel gold trendlines which are horizontal & show the presence of support & resistance. This gold pattern is plotted on a gold trading chart using a rectangle, therefore, the name rectangle chart pattern.

For this consolidation chart trading pattern, xauusd price forms multiple highs & lows that can be connected with horizontal gold trendlines that are parallel to each other. This gold pattern occurs over an extended period of time, giving the chart trading pattern its rectangle shape.

A break out of xauusd price action from this consolidation chart pattern forms when either of the horizontal line is penetrated & the price range of this rectangle is broken. An upward break out is a buy trading signal. A down-ward break out is a sell trading signal.

Rectangle Pattern XAUUSD - Consolidation Pattern

Gold Price Breaks the consolidation trading range after sometime & continues to move upward after an up-wardsupward market break out.