How Do I Trade a Consolidation Pattern?
To trade consolidation chart patterns in gold traders need to learn about the technical analysis of consolidation chart pattern.
Consolidation Trading Patterns
Consolidation xauusd trading patterns are xauusd chart patterns with converging gold trend lines that form a xauusd price consolidation period.
The technical buy point from a consolidation chart pattern is the upside breakout of xauusd price
while a downside breakout of xauusd price is a technical sell signal.
Ideally, a market breaks out from a symmetrical triangle prior to reaching the apex of the triangle.
Gold Trend lines can be drawn connecting the lows and highs of the consolidation phase, the trend lines formed are symmetric and converge to form an apex.
A xauusd price breakout should occur somewhere between 60-80% into the consolidation chart pattern - triangle chart pattern. An early or late breakout is more prone to failure, and therefore less reliable.
After a xauusd price breakout the apex forms support and resistance levels for the xauusd price. Gold Price that has broken out of the apex should not retrace past the apex. The apex of the consolidation chart pattern is used as a stop loss setting area for the open Gold trades.
When these consolidation chart patterns form we say that the Gold Trading market is taking a break before deciding the next direction to take.
These consolidation chart patterns form when there is a tug of war between the buyers and the sellers and the xauusd market cannot decide which way to move.
Gold Trade a Consolidation Pattern?
However, this consolidation chart pattern cannot go on forever and just like in a tug of war one side eventually wins, looking at the gold chart example illustrated and explained below see how the gold trading consolidation chart pattern eventually had a xauusd price breakout and moved in one direction.
Consolidation Chart Pattern Gold Price Breakout Downwards - Sell Gold Trading Signal
Consolidation Chart Pattern Gold Price Breakout Upwards - Buy Gold Trading Signal
