Bilateral/Consolidation Gold Chart Patterns XAUUSD
With bilateral/consolidation xauusd chart patterns the xauusd market can move in any direction. There are two types of consolidation xauusd chart patterns that form on xauusd charts:
- Symmetric Triangles - Consolidation xauusd chart patterns
- Rectangles - Range/ranging market
Consolidation Gold Chart Patterns
Symmetrical triangles are xauusd chart patterns with converging xauusd trend lines that form a consolidation period. The technical buy point from a symmetrical triangle is the upside break, while a downside break is a technical sell xauusd signal. Ideally, a market breaks out from a symmetrical triangle prior to reaching the apex of the triangle.
XAUUSD Trend lines can be drawn connecting the lows and highs of the consolidation phase, the xauusd trend lines formed are symmetric and converge to form an apex. A breakout should occur somewhere between 60-80% into the triangle xauusd chart pattern. An early or late breakout is more prone to failure, and therefore less reliable. After a xauusd price breakout the apex forms support and resistance levels for the gold price. XAUUSD Price that has broken out of the apex should not retrace past the apex. The apex is used as a stop loss setting area for the open XAUUSD trades.
When these consolidation patterns form we say that the gold market is taking a break before deciding the next direction to take.
These consolidation patterns form when there is a tug of war between the buyers and the sellers and the xauusd market cannot decide which way to move.
Consolidation Gold Chart Pattern
However, this pattern cannot go on forever and just like in a tug of war one side eventually wins, looking at the gold chart below see how the consolidation eventually had a breakout and moved in one direction. Now how do we make sure we are on the winning side?
Breakout Downwards Sell XAUUSD Signal after a Consolidation
Breakout Upwards Buy XAUUSD Signal after a Consolidation
Now back to our question, how do we make sure we are on the winning side?
Well we wait until gold price moves past one of the lines and put buy or sell orders in that direction. After consolidating, If gold price breaks the upper line we buy, if it breaks the lower line we sell.
Alternatively if you do not want to wait out the consolidation, you can use pending xauusd orders. If you would like to know more about pending xauusd orders go to the topic: Stop Entry XAUUSD Order Types
The two types of stop order types used to trade consolidation xauusd chart patterns are:
- Buy Entry Stop
An order to buy at a level above the gold price.
- Sell Entry Stop
An order to sell at a level below the gold price.
These are xauusd orders to buy above the xauusd market or to sell below the gold market.
Rectangle Gold Chart Pattern
A rectangle consolidation pattern is a trading range with narrow gold price action that forms a consolidation phase in gold market. The trading range is defined by two parallel xauusd trend lines which are horizontal and indicate the presence of support and resistance. This xauusd pattern is drawn on a xauusd chart using a rectangle, therefore its name rectangle xauusd chart pattern.
For this consolidation xauusd chart pattern, gold price forms multiple highs and lows that can be connected with horizontal xauusd trend lines that are parallel to each other. This xauusd pattern forms over an extended period of time giving the pattern its rectangle shape.
A breakout of gold price action from this consolidation pattern occurs when either of the horizontal line is penetrated and the trading range of this rectangle is broken. An upside breakout is a buy xauusd signal. A downside breakout is a sell xauusd signal.
Rectangle Pattern XAUUSD Trading - Consolidation Pattern
XAUUSD Price Breaks the consolidation range after sometime and continues to move upwards after an upwards market breakout.