Reversal XAGUSD Setup Patterns

These patterns are formed after the trading market has had an extended move up or down and the price reaches a strong resistance or support respectively.

When price reaches such a point it starts to form a pattern. Since these formations are frequently formed it's easy to spot them once you learn how & begin using them. There are four types:

• Double Top
• Double Bottom
• Head & shoulders
• Reverse Head and shoulders

This learn silver trading tutorial will only cover double tops and bottoms, for the other 2, read this other tutorial: head & shoulders and reverse head & shoulders

Double Tops

This is a reversal silver trading pattern that forms after an extended upwards trend. As its name implies, this formation is made up of 2 consecutive peaks that are roughly equal, with a moderate trough between.

This formation is considered complete once price makes the second peak and then penetrates the lowest point between the highs, called the neck line. The sell silver signal from this formation occurs when the trading market breaks below the neck-line.

In Silver, this formation is used as a early warning trading signal that a bullish silver trend is about to reverse. However, it is only confirmed once the neckline is broken and the trading market moves below the neckline. Neckline is just another term for last support level formed on the chart.

Summary:

• Forms after an extended move upwards
• This formation indicates that there will be a reversal in trading market
• We sell when price breaks below the neck line point: see below for explanation.

The double top look like an M-Shape, the best reversal silver signal is where the second top is lower than the first one as shown below, this means that the reversal can be confirmed by drawing a downward silver trend line as shown below. If a trader opens a sell silver signal the stop loss will be placed just above this downward silver trend line.

M Shaped

Double Bottoms

This is a reversal silver trading pattern that is formed after an extended downward silver trend. It is made up of 2 consecutive troughs that are roughly equal, with a moderate peak between.

This formation is considered complete once trading price makes the second low and then penetrates highest point between the lows, called the neckline. The buy indication from this bottoming out signal occurs when trading market breaks the neck-line to the upside.

In Silver, this formation is an early warning trading signal that the bearish silver trend is about to reverse. It's only considered complete/confirmed once the neck-line is broken. In this formation the neckline is the resistance zone for the price. Once this resistance is broken the trading market will move up.

Summary:

• Forms after an extended move downward
• This formation indicates that there will be a reversal in trading market
• We buy when price breaks above the neck line point: see below for explanation.

The double bottom pattern look like a W Shape, the best reversal silver trading signal is where the second bottoms is higher than the first one as shown below, this means that the reversal can be confirmed by drawing an upward silver trend line as shown below. If a trader opens a buy silver signal the stop loss will be placed just below this upward silver trend line.

W Shaped