Commodities Trading Trend Line Break

After commodity price has moved in a certain direction for an extended period of time within a trading channel it reaches to a point where it stops moving within this channel. When this happens we say that the trend line has been broken.

Since the line is point of support or resistance then we expect the commodities trading market to move toward the opposite direction. When this happens traders will close the commodity orders which they had bought or sold. This is referred to as taking profit.

Up Commodity Trading trend Reversal

When commodity price breaks-out upwards line (support) the commodities trading market will then move down

This signal is considered to be complete with the creation of lower high or lower low. This also provides a trading opportunity to go short once it is broken.

Down Commodity Trading trend Reversal

When commodity price breaks downward line (resistance) the commodities trading market will then move up

Downward Channel break

This trading signal is considered to be complete with creation of a higher low or higher high. This also provides a trading opportunity to go long once it is broken.

NB: Sometimes when price breaks its commodity trend it might first of all consolidate before moving in the opposite direction. Either way it is always good to take profit when the commodities trading market direction reverses.

To trade this commodities trading setup as a trader once you open a new trade in direction of the trend reversal the commodity price should immediately move in that direction, in a commodity price breakout manner. This means that the commodities trading market should immediately move in that direction without much of a resistance.

If on the other hand the commodities trading market does not immediately move in direction of the commodity price breakout then it is best to close out the trade because it means that the commodity trend is still holding.

Another tip is to wait for the trend line to be broken & for the commodities trading market to close above or below it so as to confirm this commodity trade signal.

What happens is that most traders open trades waiting for a reversal even before the commodity trend is broken, only for the commodity price to touch this line and for the current market direction to hold and commodity to continue with the current market direction.

Therefore, when trading this commodities trading setup it is best to wait until the breakout has been confirmed by commodity price closing above or below trendline, depending on the direction of the market.

• Upwards Market Direction Reversal - this commodity signal is confirmed once the commodities trading market closes below this upward line, this should be the correct time to open a sell short trade, so as to avoid a commodity trading whipsaw.

• Downwards Market Direction Reversal - this commodity signal is confirmed once the commodities trading market closes above the downwards line, this should be the correct time to open a buy long trade, so as to avoid a commodity trading whipsaw.

Combining With Double Tops or Double Bottoms Chart Patterns

A good trade setup to combine this commodities trading setup with is the double tops and double bottoms patterns. Read Double Top & Double Bottom Chart patterns Guide.

This setup should already have formed before the commodity trend break signal. Because these double tops and double bottoms are also reversal commodities trading signals, then combining these 2 setups will give the trader a good probability of avoiding a commodity trading whipsaw.

In the above chart screenshots these commodity trading setups can be confirmed to have formed even before the reversal commodity trade signal appeared.

First Example of Upwards Direction Reversal - the Double tops pattern had already formed before the commodity trend break signal appeared on the commodities trading chart.

Second Examples of Downward Direction Reversal - the Double bottoms commodity trading pattern had already formed before the commodity trend break signal appeared on the commodities trading chart.

Double Top or Double Bottom Combined With other Reversal Trading Signals