How to Trade a Gold Trend Reversal
XAUUSD Trend Reversal Trading Strategy
After xauusd trading price has moved in a particular direction for an extended period of time within a gold trend it reaches a point where it stops moving within the trend. When this happens we say that the trend line has been broken & this is interpreted as a gold trend reversal signal.
Since the trend line is the point of support or resistance & this point of support or resistance has been broken after a gold trend-line break - we then expect the xauusd trading price to move towards the opposite direction and this is interpreted as a gold trend reversal signal.
When this happens gold traders will close the open gold orders which they had bought or sold. This is referred to as taking profit.
Up Gold trend XAUUSD Trading Reversal
When xauusd trading price breaks-out below the upward trend line (support) xauusd market will then move downwards
Upwards Gold Trend-Line Break - How to Identify a Gold Trend Reversal Signal
This gold trend reversal trading signal is considered to be confirmerd with formation of a lower high of the xauusd price. This also provides a trading opportunity to sell once the trend line is broken - gold trading reversal signal.
Down Gold trend XAUUSD Trading Reversal
When xauusd trading price breaks-out above the downwards line (resistance) the xauusd trading price will then move up
Downwards Gold Trend Line Break -How to Identify a Gold Trend Reversal Signal
This gold trend reversal trading signal is considered to be confirmed with the creation of a higher low. This gold reversal setup also provides a trading opportunity to open a buy gold trade once the trend line is broken - gold trend line reversal xauusd trade signal.
NB: Sometimes when price breaks its gold trend it might first of all consolidate before moving in the opposite direction. Either way it is always good to take profit when the xauusd market trend reverses.
To trade this gold trading reversal setup as a trader once you open a new gold trade in the direction of the trend reversal the xauusd trading price should immediately move in that direction, in a xauusd price break-out manner. This means that the xauusd trading prices should immediately move in that direction without much of a resistance.
If on the other hand the xauusd trading prices do not immediately move in direction of the xauusd trading price breakout then it is best to close out the gold trade because it means that the gold trend is still holding.
Another tip is to wait for the trend line to be broken & for the xauusd market to close above or below it so as to confirm this gold trend reversal signal.
What happens is that most traders open trades waiting for a gold trading reversal even before the gold trend is broken, only for the xauusd trading price to touch this gold trend line & for the current market gold trend direction to hold and gold to continue with the current market trend.
Therefore, when trading this gold trading reversal setup it is best to wait until the xauusd trading price break out has been confirmed by xauusd trading price closing above or below the trend line, depending on the direction of the market.
- Upwards Market Gold Trend Direction Reversal - this reversal gold signal is confirmed once the xauusd trading price closes below this upward trendline, this should be the correct time to open a sell gold trade, so as to avoid a gold trading whipsaw.
- Downwards Market Gold Trend Direction Reversal - this reversal gold signal is confirmed once the xauusd price closes above the downward gold trendline, this should be the correct time to open a buy gold trade, so as to avoid a gold trading whipsaw.
