Add Trend Line on Gold Chart

Sometimes support and resistances are formed diagonally in a similar way like a staircase. This forms a xauusd trend which is a sustained movement in one direction either upwards or downwards.

A xauusd trend line depicts the points of support and resistance for the gold price, depending on the direction of the market. For an upwards moving market it will shows the points of support and for a downwards moving market it will show the areas of resistance and they are mainly used by many investors to determine these resistance and support levels.

XAUUSD Trendline is a straight line that connects two or more price points then extend into the future to act as areas of support or resistance. There are two different types: upward and downward. It is an aspect of gold trading analysis that uses line studies to try and predict where the next move will head to. A trader must know how to draw and interpret signals generated by this tool.

The basis of this analysis is based upon the idea that markets move in trends. They are used to show three things.

• The general direction - up or down.
• The strength of the current move - and
• Where future support and resistance will be likely located

If lines forms in a certain direction then market usually moves in that direction for a period of time until a time when it is broken.

Plotting these on a xauusd chart shows the general xauusd trend of the xauusd market which can either be upward or downwards.

Below is example of how to plot these on charts

Tutorial: How to Draw & Trade Upwards Move

Tutorial: How to Draw and Trade Downward Move

The MT4 software provides charting tools for drawing these on gold charts. To draw them onto a xauusd chart, investors can use the tool provided on the MetaTrader 4 software that is shown below.

To draw on this on a xauusd chart just click the drawing tool above on the MetaTrader 4 technical analysis software and select point A where you want to start drawing and then point B where you want the it to touch. You can also right-click in the trend-line and on the properties option select the option to extend ray by checking 'ray check box', if you don't want to extend it, then uncheck this option in your xauusd platform. You can also change other properties such as color & width on this property popup window panel of the properties. You can download MT4 software and learn technical analysis with it.

The xauusd trend is your friend. Is a popular saying among investors because you should never go against it. This is most reliable method to trade XAUUSD Trading because once prices begin to move in one direction they can continue to move in that particular direction for quite some time - therefore using this method presents opportunity to make profits from the gold trading market.

Principles of How to Draw

1. Use candle charts

2. The points used to draw are along the lows of the gold price bars in a rising market. An upward bullish move is defined by higher highs & higher lows.
3. The points used to draw are along the highs of the gold price bars in a falling market. A downward bullish move is defined by lower highs and lower lows.
4. The points used to draw are extremes points - the high or the low gold price. These extremes are important because a close beyond the extreme tells investors the xauusd trend of xauusd might be changing. This is an entry or an exit signal.
5. The more often a trend-line is hit but not broken, the more powerful its signal.

There are 2 main ways of trading this xauusd setup:

1. The Bounce
2. The Break

Technical Analysis Methods

The bounce is a continuation signal where gold price bounces off this line to continue moving in the same direction. In a downward move, the xauusd market will bounce downward after hitting this level which is the resistance level. In an upward move, the xauusd market will bounce upwards after hitting this level which is the support level.

The break is a reversal signal where the xauusd market goes through the line and starts moving in the opposite direction. When an up xauusd trend is broken then sentiment of the xauusd market reverses and becomes bearish and when a down xauusd trend is broken then the sentiment reverses & becomes bullish.

For very strong trends, after this break signal, the gold price will consolidate for some time before heading in the opposite direction. For short term trends then this break signal will mean gold price may reverse immediately.

In xauusd technical analysis, both the bounce and the breaks that are used in technical analysis charts are based upon these levels being support and resistance.

Entry, Exit & Setting stops:

This method used to determine good entry and exit points, protective stops are placed just below them. The bounce is a low-risk entry method used by traders to place entry trades after gold price has retraced. Trades are setup along these levels & a stop loss placed just above or below.

The xauusd trend-line break is a crucial technical indicator of possible XAUUSD Trading reversal. When a the its broken the gold price starts move in the opposite direction. This provides an early exit signal for investors to exit their open trades and take profits. When there a penetration of these levels, it is a signal that the gold price can begin heading in opposite direction.

Unlike other technical analysis indicators there is no formula used to calculate it, this formation is just drawn between 2 chart points.