How Do I Analyze Downward Gold Trend Lines on Gold Charts?
Trading XAUUSD Interpret Downwards Gold Trendlines on Gold Charts
A downward trend line is formed by consecutive lower highs on the price chart - the downward gold trend line is drawn downwards connecting these lower highs - the downward trendline must connect at least two price highs - with the most recent price high being lower.
Because price moves downward in a zigzag manner - traders will draw a downward gold trend line showing the general downwards price direction. In technical analysis - this general direction of price is known as the Gold Trend. In xauusd analysis - downward trendline is plotted on a chart showing the resistance areas.
How to Interpret Downwards Gold Trend Lines on Gold Charts?
A gold downward trend occurs when the price makes a series of lower price highs & lower price lows. Each price high is lower than the previous price high - lower high, & each price low is lower than the previous price low - lower low therefore showing a downward movement of price.
How Do I Read Downward Gold Trend Lines on XAUUSD Charts?
Gold downward trend lines gain more validity each time the price touches the downward trend line but doesn't penetrate the downward trend-line. A downward trend remains the general direction of price movement until this series of lower highs and lower lows is broken.
In xauusd analysis - An upside penetration of a gold downward trend line is interpreted as a reversal signal, and is interpreted that the bearish downward movement of prices may soon reverse.
Interpret Downward XAUUSD Trend Lines on XAUUSD Charts
To learn how to draw and analyze gold downward trend, you need to know that in gold trading when the trend is bearish it forms lower lows and lower highs on the price chart - forming a downward general market movement direction. These are the chart points that are used to plot the downward gold trend line.
To draw the downwards trend line - traders use resistance levels and to draw the downward trend line correctly two resistance levels are required. When the price touches this downward trend-line - traders will open sell trades & place stop loss orders just a few pips above the downward gold trend line:
How to Interpret Downwards Gold Trend Lines on Gold Charts?
Trading XAUUSD Interpret Downwards Gold Trendlines on Gold Charts
When trading with this downward trend line method - the general direction of the market is interpreted as downwards and therefore traders will only open sell trades when trading this downwards trend line setup. The downward trend line shows the levels where if the price retraces then these levels will provide strong resistance. This is why these levels are used by many traders to determine when to open sell trades. Gold trades opened at these levels will have a high Risk to Reward Ratio with minimum draw down - minimum price retracement.
For example, in the above downward trend line example - a trader would have generated sell signals at the resistance 1, resistance 2, resistance 3 and these sell signal would have made good xauusd trades with minimum amount of draw down ( price retracement).
Downwards XAUUSD Trend Lines
The MT4 gold tools to draw these trend-lines in MT4 charts can be found on the Lines Toolbar within the MetaTrader 4 platform, to access this MetaTrader 4 tool bar if it is not activated on your MetaTrader 4 Platform, Click in "View" Next to "File" at the tops left corner of MT4 Platform & click View, Then Click on Tool-bars, Then Tick the Lines Toolbar by clicking on it.
Below is the explanation of these MetaTrader 4 trend line drawing tools: just click on this MetaTrader 4 trend lines drawing tool and select the points where you want to place this gold trend lines on the chart.
MT4 Technical Analysis Charts - Downwards Gold Trend Lines
Interpret Downward Gold Trend Lines on Gold Charts
MT4 Charts Toolbar - MetaTrader 4 Tools for Analyzing Gold Trend Lines used to draw gold trend lines is shown above - to draw these trend lines - select the above MetaTrader 4 trendline plotting tool and select the two chart points where you want to plot the downward trend line.
Trend line gold trading strategy is one of the most popular technical analysis methods used by traders to analyze and read trend moves.
How Do You Interpret Downward Gold Trend Lines on Gold Charts
