How Do I Trade Reversal Chart Pattern in XAUUSD

Reversal Trading Setup Patterns confirm the reversal of the market trend once this reversal pattern setup is confirmed.

How Do I Trade the Reversal Setup Patterns

These reversal chart patterns are formed after extended market trend either upward or downward and these reversal chart patterns signal that the market trend is ready to reverse.

Reversal Trading Setup Patterns

• Double Top Reversal Setup Patterns

• Double Bottom Reversal Setup Patterns

• Head & Shoulders Reversal Setup Patterns

• Reverse Head and Shoulders Reversal Setup Patterns

Double Top Pattern Technical Analysis

Double tops pattern setup is a reversal chart pattern setup that's formed after an extended upward trend. As its name implies, this pattern is made up of two consecutive peaks which are roughly equal, with a slight trough in between.

How to Analyze Double Tops Reversal Setup Patterns

Double tops pattern setup formation is considered complete once price makes the second peak & then penetrates the lowest point between the highs, called the neckline. The sell signal from the formation occurs when the market breaks-out below neck line.

In XAUUSD, double tops chart pattern formation is used as an early warning signal that a bullish trend is about to reverse. However, it's only confirmed once the neck-line is broken & the market moves below the neckline. Neck line is just another term for the last support level formed on the chart.

Summary:

• Double tops pattern forms after an extended move upward
• Double tops chart pattern setup formation demonstrates that there will be a reversal in market
• We sell when the price breaks-out below neck-line point: see below for explanation.

Interpret Double Tops Reversal Chart Patterns? - Double Tops Technical Analysis

Double Bottom Pattern Technical Analysis

Double bottom xauusd pattern setup is a reversal pattern that is formed after an extended downwards trend. It's made up of two consecutive troughs which are roughly equal, with a slight peak in between.

How to Analyze Double Bottoms Reversal Setup Patterns

Double bottom xauusd pattern setup formation is considered complete once price makes second low & then penetrates the highest point between lows, called the neckline. The buy indication from the bottoming out signal occurs when the market breaks-out the neck-line to the upside.

In XAUUSD, double bottoms pattern formation is an early warning signal that the bearish trend is about to reverse. It's only considered complete/confirmed once the neck-line is broken. In this formation the neckline is the resistance area for the price. Once this resistance level is breached the market will move up.

Summary:

• Double bottom pattern forms after an extended move downwards
• Double bottoms chart pattern setup formation demonstrates that there will be a reversal in market
• We buy when the price breaks-out above neck-line point: see below for the explanation.

Interpret Double Bottom Reversal Chart Patterns? - Double Bottoms Technical Analysis

Head & Shoulders Pattern Technical Analysis

Head & Shoulders pattern is a reversal chart pattern setup which forms after an extended upwards trend. It's made up of three consecutive peaks, the left shoulder, head and the right shoulder with two moderate troughs between the shoulders.

How to Analyze Head & Shoulders Reversal Setup Patterns

Head & Shoulders chart pattern setup is considered complete once price penetrates below the neck line, which is plotted by joining the two troughs between the shoulders pattern.

To go short, traders place their sell stop orders just below neck-line.

Summary:

• Head & Shoulders pattern forms after an extended move upwards
• Head & Shoulders chart pattern setup formation demonstrates that there will be a reversal in market
• Head and Shoulders pattern formation resembles head with shoulders thus its name.
• To draw the neckline we use chart point 1 & point 2 as displayed below. We also extend this line in both directions.
• We sell when the price breaks below the neck-line point: see the chart below for explanation.

Interpret Head & Shoulders Reversal Chart Patterns? - Head & Shoulders Technical Analysis

Reverse Head and Shoulders Pattern Technical Analysis

Reverse Head and Shoulders pattern is a reversal head and shoulders pattern which forms after an extended downwards trend. It resembles an upside-down head shoulders.

How to Analyze Reverse Head & Shoulders Reversal Setup Patterns

Reverse Head & Shoulders chart pattern setup is considered complete once price penetrates above the neckline, which is plotted by joining these two peaks between the reverse shoulders pattern.

To go long buyers place their buy stop pending orders just above neckline.

Summary:

• Reverse Head and Shoulders chart pattern forms after an extended move downward
• Reverse Head and Shoulders chart pattern setup formation demonstrates that there will be a reversal in market
• Reverse Head & Shoulders pattern formation resembles upside-down, thus the name Reverse.
• We buy when price breaks out above neckline point: see the chart below for explanation.

Interpret Reverse Head & Shoulders Reversal Chart Patterns? - Inverse Head & Shoulders Technical Analysis

How Do I Analyze Reversal Patterns - Reversal Chart Patterns