What is a Gold Trend Reversal?
Definition and Meaning of a XAUUSD Trend Reversal and How to Trade a XAUUSD Trend Reversal
In gold trading the trend line break signal is used to signify a gold market reversal gold signal. When a gold trend line is broken then it means that the momentum of the current gold trend is reducing and the current gold trend might reverse and start moving in the opposite direction or form a consolidation chart pattern before it reverses.
XAUUSD Trading Market Reversal XAUUSD Trading Signal
After xauusd price has moved in a certain 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.
Since the trend line is the point of support or resistance then we expect the xauusd market to move towards the opposite direction. When this happens gold traders will close the open gold trade which they had bought or sold. This is known as taking profit.
Up XAUUSD trend Gold Trading Reversal
When xauusd price breaks upward gold trend line (support) the xauusd market will then move down or form a consolidation pattern before moving downwards.
What is Upward Gold Trend Reversal in Gold Trading? - What is a Gold Upward Trend Reversal?
This upward gold trend gold trend line break reversal signal is considered to be complete with the reversal gold pattern of a lower high is formed on the xauusd price chart. This also provides a trading opportunity to go short once the trend line broken.
XAUUSD Trading Market Reversal Trading Signal
When xauusd price breaks downward gold trend line (resistance) the xauusd market will then move up or form a consolidation pattern before moving upwards.
What is Downward Gold Trend Reversal in Gold Trading?
This downward gold trend line break reversal signal is considered to be complete with the pattern of a higher low is formed. This also provides a trading opportunity to go long once the downward gold trend line is broken.
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 direction reverses.
To trade this gold trend reversal setup as a trader once you open a new trade in the direction of the trend reversal the xauusd price should immediately move in that direction, in a xauusd price breakout manner. This means that the xauusd market should immediately move in that direction without much of a resistance.
If on the other hand the xauusd market does not immediately move in the direction of the xauusd price breakout then it is best to close out the trade because it means that the current gold trend is still holding.
Another tip is to wait for the trend line to be broken and for the xauusd market to close above or below the trend line so as to confirm this gold trend reversal signal.
What happens is that most gold traders open trades waiting for a reversal gold signal even before the current gold trend is broken, only for the xauusd price to touch this gold trend line and for the current market gold trend direction to hold and gold to continue with the current market direction.
Therefore, when trading this gold trend reversal setup it is best to wait until the xauusd price breakout has been confirmed by xauusd price closing above or below the trend line, depending on the direction of the xauusd trading market.
- Upward Gold Trading Market Direction Reversal - gold trend line reversal gold signal is confirmed once the xauusd market closes below this upward trend line, this should be the correct time to open a sell gold trade, so as to avoid a gold trading whipsaw.
- Downward Gold Trading Market Direction Reversal - gold trend line reversal gold signal is confirmed once the xauusd market closes above the downward gold trend line, this should be the correct time to open a buy gold trade, so as to avoid a gold trading whipsaw.
