XAUUSD Momentum Market Trends - Trade Parabolic XAU/USD Price Trends

What is a Momentum Trend?A momentum trend is a trend that has more momentum than the previous one: this new trend can be drawn using a much steeper trend line than the one which was in place before. When a new trend-line forms that's much steeper than a previous one we say that the trend has gained extra power and becomes much stronger. These types of setups require a different type of market trading analysis.

In the example illustration below: Also when price is moving upwards within a channel, if it breaks the upwards channel a stronger price trend is formed like is displayed and illustrated in the diagram below. If as a trader your price chart breaks an upwards trend-line to the up side in an upward moving market like the one below, Do-not Try to Sell, Buy More Contracts, Remember this XAU USD tip it can make and earn you a lot of money just like in the way it did in the market analysis below.

Momentum Price Trend - Channel Break Upward - More Momentum on Upwards Trending Market

Using the same trading analysis example above we can also see how new steeper trend lines were formed showing the price trend was gaining momentum.

This is displayed and illustrated by the steeper trend-lines which can be drawn as the price movement progresses.

The newly formed upwards trend has more power than prior one just as displayed and shown by the setup formation of the steeper trend-line.

This new trend forms trend B & C like as displayed and shown in the diagram below drawn using the MetaTrader 4 technical analysis software, the momentum added a new steeper trend line as drawn on the price chart.

This is displayed and shown in the example below by the three trend-lines A, B and C showing formation of stronger trends as the price continues to gather more force.

Gold Price Gaining More Upwards Momentum

However, when the steepest trend line is broken then even all the others will most likely be broken too. It is best to take profit once the steep most trend line is broken.

This strategy can also be used by short term Gold traders like the day traders or the scalpers, this pattern will frequently form on the 5 minute and 15 minute Gold price chart. These parabolic trend-lines can be used to know where to set take-profit. A trader should immediately take his profit as soon as the steepest trend line is broken.

How to Trade These Momentum Market Trends Setups

The momentum trend lines are good tools for figuring out where to takeprofit early before other traders. This momentum trading setup occurs frequently on 1 minutes, 5 minute and 15 minute charts & thence suitable for scalpers and day traders. For day trading which is most common the best chart time frame to use is the 15 minutes sometimes the five minutes, For exemplification after entering a short term trade either a buy/sell trade and the market moves some pips in your favor and you spot this pattern then it is best to exit once the steepest trend line is broken and take profit at that point.

Technical Analysis Example

For this illustration we shall use the short term trading chart - the 5 minute trading chart for drawing these trading setup, when the setup appeared as below, it was a good point to take profit order.

Trading the Momentum Market Moves

In the above example illustration a trader trading long would have waited until the steepest trend line was broken and then closed their buy trade - taking and booking profit at this point thus making a profit of on this buy trade. The trader would have exited the trade at the best time & thus avoided the sideways oscillating market which followed.

Parabolic Trends - What is it?

Sometimes prices move in a parabolic manner, and this is seen when panic buying sets in & price of XAUUSD is driven vertical. During a parabolic upward move, there's almost a complete absence of sellers, which creates a vacuum of buying. When this occurs, traders rush just to get in to the market regardless of price, in fear of being left behind. This parabolic trends can make the biggest price movements in the shortest period of time, traders will just keep opening and placing buy orders in this setup.

For this type of move it's best to keep buying - no need for technical analysis just keep buying.

This trend will last for months on end even up to 2 years, for this time just keep buying and as long as those weekly and monthly trend lines are holding just keep buying and buying.

When the price of a Stock or a Currency pair or Gold moves in this way, the highest point that is reached often marks the end of that upwards move with the prices not returning to the ultimate highs again for a long time. When this point is reached & the most steepest trend-line is broken it's best to consider that as a price trend reversal & it is best to take time out of the market & enjoy your profits for-some time before calculating your next market move.

The same can also happen for a downward trend when there's panic selling and price also is driven vertical. This especially happens during recession when prices of commodities keep bidding lower and lower.

The steeper a trend-line angle, the less reliable it becomes. When the steepest trend line is broken it is best to exit this buy trade. The example illustration below is for oil chart which formed a parabolic setup.

Parabolic Trend

As a trader if you come across a parabolic trend in an upwards trending market just keep buying & buying some more - you'll make a lot of profits, there will be no added trading analysis required just the trend lines. The only thing to remember is to exit once the steepest trend-line is broken because the reversal on this setup is very fast and quick you also need to be very fast. Just ensure you get out and exit at the correct level just like in the above illustration.

For example illustration, the above parabolic movement is of crude oil chart, the Gold traders had managed to drive the price of oil from $70 to $150 dollars over a period of a couple of months at the top of the market those who call themselves trade analysts were so bullish that they predicted the price of oil would hit an all time high of $200, what these analysts did not know this concept of parabolic market trend a.k.a Vacuum buying, in trading analysis market trading as long as the trend lines held the direction of the price was upwards, but even after the first steep most line was broken the analysts kept on insisting the price would hit $200 dollars, guess what, after the most steep trend line was broken it did not even take two weeks to take the price of oil, back to $50 at one time it was even $35 dollars. That is parabolic trading analysis, now you know.

Another example of parabolic price move is XAUUSD which formed and occurred on the weekly/monthly trading chart during the same timeframe period shortly after the steepest trend line on the oil chart was broken. You can open the Gold chart and use the Weekly & Monthly chart time frames to try and spot these parabolic trend setup of Gold prices.

Good examples of this setup on charts is the weekly and monthly price charts for Gold and Crude Oil, these charts can be found on MetaTrader 4 software depending on your broker.

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