How to Draw XAUUSD Trend Lines and Channels on Gold Charts
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 gold market. For an upward moving xauusd market xauusd trend - the xauusd trend line will shows the points of support and for a downward moving xauusd market xauusd trend - the xauusd trend line will show the areas of resistance - xauusd trend lines are mainly used by many gold traders to determine these resistance and support levels on gold charts.
A XAUUSD Trend line is a slanting straight line that connects two or more gold price points and then extends into the future to act as a level of support or resistance. There are two types of xauusd trend lines: upward xauusd trend line and downward xauusd trend line. XAUUSD trend line is an aspect of gold trading analysis that uses xauusd line studies to try and predict where the next gold price move will head to. A xauusd trader must know how to draw and interpret xauusd signals generated by this xauusd trend line tool.
The basis of this xauusd technical analysis is based upon the idea that xauusd markets move in trends. XAUUSD trend lines are used to show three things.
- The general direction of the xauusd market - up or down.
- The strength of the current xauusd trend - and
- Where future support and resistance will be likely located
If xauusd trend lines forms in a certain direction then the xauusd market usually moves in that direction for a period of time until a time when this xauusd trend line is broken.
Drawing these xauusd trend lines on a xauusd chart shows the general xauusd trend of the xauusd market which can either be upward or downward.
Below is an example of how to draw these xauusd trend lines on gold charts
Tutorial:How to Draw Upward XAUUSD Trend Line and Trade Upward XAUUSD Trend Move
Tutorial: How to Draw XAUUSD Trading Downward XAUUSD Trend Line and Trade Downward XAUUSD Trend Move
The MetaTrader 4 xauusd trading software provides xauusd charting tools for drawing these xauusd trend lines on gold charts. To draw xauusd trend lines onto a xauusd chart, gold traders can use the xauusd tools provided on the MetaTrader 4 xauusd trading software that is shown below.
To draw xauusd trend lines on a xauusd chart just click the XAUUSD Trading MetaTrader 4 Draw XAUUSD Trend Line Tools as shown above on the MetaTrader 4 gold trading platform technical analysis software and select point A where you want to start drawing the xauusd trend line and then point B where you want the xauusd trend line to touch. You can also right click on the xauusd trend line and on the properties option select the option to extend its ray by ticking the "ray check box", if you do not want to extend the xauusd trend line, then uncheck this option in your MetaTrader 4 gold trading platform. You can also change other xauusd trend line properties such as color and width on this property popup window of the xauusd trend line properties. You can download MetaTrader 4 software and learn xauusd trend line 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 the most reliable method to trade XAUUSD Trading because once xauusd prices start to move in one direction they can move in that particular direction for quite some time - therefore using this xauusd trend trading method presents opportunity to make profits from the gold market.
Principles of How to Draw XAUUSD Trend Lines
Use xauusd candlestick charts
- The points used to draw the xauusd trendline are along the lows of the gold price bars in a rising xauusd market. An upward bullish xauusd trend move is defined by higher highs and higher lows.
- The points used to draw the xauusd trend line are along the highs of the gold price bars in a falling market. A downward bearish xauusd trend move is defined by lower highs and lower lows.
- The points used to draw xauusd trend lines 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.
- The more often a xauusd trend line is hit but not broken, the more powerful its signal.
There are two main ways of trading this xauusd trend line technical analysis setup:
- The XAUUSD Trend Line Bounce - XAUUSD Trend Line Bounce
- The XAUUSD Trend Line Break - XAUUSD Trend Line Break
Technical Analysis Methods of XAUUSD Trend Lines
The xauusd trend line bounce is a continuation xauusd signal where gold price bounces off this xauusd trend line to continue moving in the same direction. In a downward xauusd trend, the xauusd market will bounce downwards after hitting this xauusd trend line level which is the resistance level. In an upward xauusd trend, the xauusd market will bounce upwards after hitting this xauusd trend line level which is the support level.
The xauusd trend line break is a reversal xauusd signal where the xauusd market goes through the xauusd trend line and starts moving in the opposite direction. When a xauusd up trend is broken then the sentiment of the xauusd market reverses and becomes bearish and when a xauusd down trend is broken then the xauusd market sentiment reverses and becomes bullish.
For very strong xauusd trends, after this xauusd trend line break signal, the gold price will consolidate for some time before moving in the opposite direction. For short term xauusd trends then this xauusd trend line break xauusd signal will mean gold price may reverse immediately.
In xauusd, both the xauusd trend line bounce and the xauusd trend line break that are used in technical analysis charts are based upon these xauusd trend line levels being support and resistance levels.
Entry, Exit and Setting stops:
This xauusd trend line trading method is used to determine good entry and exit points, protective stops are placed just above or below these xauusd trend lines. The xauusd trend line bounce is a low-risk entry method used by gold traders to place entry trades after gold price has retraced. XAUUSD trades are setup along these xauusd trend line levels and a stop loss placed just above or below these xauusd trend lines.
The xauusd trend line break is a crucial indicator of possible xauusd trend reversal. When the xauusd trend line is broken the gold price starts move in the opposite direction. This provides an early exit signal for gold traders to exit their open trades and take profits. When there a penetration of these xauusd trend line levels, it is a signal that the gold price can start moving in the opposite direction.
Unlike other xauusd technical analysis indicators there is no formula used to calculate the xauusd trend line, this xauusd trend line formation is just drawn between two chart points on the gold chart.
