How to Trade a XAUUSD Downtrend
Down Gold trend is when the price of a gold chart is moving lower and lower. Gold Trading xauusd prices generally close lower than where they opened.
How to Trade Downward Gold Trend: Gold traders use the downward gold trend direction to open sell gold trades
Drawing a Downward Gold Trendline
When it comes to learning how to draw a downward gold trend line, you need to know that when the xauusd market is bearish it forms lower lows and lower highs forming a downward general gold trend direction - downwards xauusd trend. These are the points that are used to draw a downward gold trend line.
To draw downward gold trend setup we use resistance levels and to do it correctly two resistance levels are needed. When xauusd trading price touches this downward trend line, then we open sell xauusd trades and place stop loss just a few pips above the sloping resistances:
How to Trade a Downtrend? - Strategy for Trading a Gold Downward Trend
Trading This Down XAUUSD Trend Market Move
When trading with this down gold trend method, this downward trend setup will show the general direction of the xauusd market as downwards therefore gold traders will only open short sell xauusd trades. These resistance levels are the levels where if xauusd trading price retraces then these points will provide strong resistance. This is why many gold sellers will wait until xauusd trading price retraces upwards and hits these retracements levels to open sell xauusd trades. Trades opened at these levels have a high Reward to Risk Ratio and have little drawdown.
For Example, in the above downwards gold trend example, a gold trader would have opened short sell signals at the resistance 1, resistance 2, resistance 3 and these sell xauusd trades would have been opened with minimum amount of draw-down/retracement.
How to Draw a Downward XAUUSD Channel
A downwards gold channel is drawn by drawing a line that is parallel to the downward gold trend line and then adjusting it to touch the bottom boundary of the xauusd trading price movement. This then forms a channel and as long as the trading price stays between these two channels the general market down gold trend direction is intact the xauusd market direction will continue being bearish.
How to Draw a Downward Gold Channel - Gold Downward Trend Trading Strategy
Trading the Downward XAUUSD Channel
The downward gold channel is used by traders to show levels where it best to take profits. Traders will take some profit once the xauusd trading price touches the lower channel or the lower channel and wait for another retracement before opening a short sell gold trade again.
