Drawing Upwards TrendLines & Channels
An upwards trend-line is a line drawn on the Gold chart when the general trend of the prices is moving upward & hence this line is drawn below these upward trending prices by joining at least 2 lows of the upward price trend. This line will show the general trend of the market to be upward.
The example set-out below explains this concept and describes how prices move when in an upwards trend. When the market is moving upwards it keeps forming new support zones as it moves upwards & these support zones are the ones used to draw the upwards trend-line.
Because the market heads in a zigzag sort of manner, traders will usually draw a trend which shows the general upwards trending direction.
Upward Trending Market
An upward trend occurs when the prices of Gold keep making consecutive higher highs & higher lows. Each high is higher than the previous high - higher high, & each low is higher than the previous low - higher low.
The Upwards trend-lines gain more validity every time the price of Gold touches the line but does not penetrate it. An uptrend remains in play until this series of higher highs and higher lows is broken.
A down-side penetration of an upwards trend-line is a technical sell signal, & normally the first indication which an uptrend might soon end or begin to consolidate.
Drawing an upward Trend-Line
When the online Gold market moves upward it forms higher highs & higher lows forming a bullish price movement. An upwards trend-line can then be drawn by joining the higher lows.
To draw this set-up we use support zones made by the prices. To draw an upwards trend line correctly two support zones are needed. When price touches this upwards trend-line we buy and place a stop loss just a couple of pips below this trendline. The diagram below shows an example of an upwards trend-line.
Upward Trend-Line - Gold Trading
The trendline setup will show the general direction of the Gold market as bullish therefore traders only will open buy trades as long as price movement is within this setup & within the support levels. These are the levels where if the market retraces then these points will give major supports for the price. This is why many buyers will wait until price retraces downwards and hits these retracements areas to open a buy trades.
Trades opened at these levels have a very high Risk: Reward Ratio and are very profitable.
In the above setup the online trader would have opened buy/long trade positions from the trade signals generated/derived at the support1, support2, support3 & these trades would have made a lot of profits with minimum amount of draw-down. This is why many traders like to trade using this trendline trading setup.
Drawing Upwards Channel
An upward channel is drawn by drawing a line that is parallel to the upwards trend line and then this new line is adjusted to touch the top boundary of the price movement. This then forms a channel of the price and as long as the stays in between these 2 channels the bullish price movement of Gold prices will continue heading up.
Upward Channel - XAUUSD Gold Trading
Trading the Upward XAUUSD Gold Prices Channel
This upward channel is used by Gold traders to show levels where it best to tp orders. Gold traders will take some profit once the price touches upper channel & wait out for another retracement before opening another buy trade position again.
MetaTrader 4 Tools for Drawing Upward Trend-Line and Channels
The tools to draw these setups on the MetaTrader 4 are located on the MT4 drawing toolbar within the MT4 software platform, to access this tool bar if it isn't activated on your platform, Press in "View" Next to the "File" on the top left corner of the MT4 & click "View", Then Click on "Tool Bars", Then Check & select and choose the "Lines Tool Bar" by pressing on it.
Below is the screenshot of the MT4 trendlines drawing toolbar. To draw a trendline on a Gold chart just click on this tool & select and choose the point where you as a trader want to draw.
MT4 Tool-Bar for Drawing Upward Trend-Line and Channels
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