2. POINTS TO BE COVERED TODAY:
• How to Draw Trend Lines and Channels on Gold Trading Charts
• Upward & Downline Trend
• Drawing Trend Lines on Gold Trading Charts Using Meta Trader 4 Platform
• Principles of How to Draw Trend Lines
• Ways Of Trading Trend Line
• Morning Star Candlestick, Evening Star Candlestick and Engulfing Pattern
Candlestick
3. HOW TO DRAW TREND LINES AND CHANNELS
ON GOLD TRADING CHARTS
• Sometimes support and resistance levels are formed diagonally in a
similar way like a staircase.
• This forms a price trend which is a sustained movement in one direction
either upwards or downwards.
• This trend can be depicted by a trend line.
• A trend line depicts points of support and resistance for the price,
depending on the direction of the market prices.
• For an upward moving market a trend line will show the points of support
and for a downwards market the trend line will show areas of resistance.
• Trend lines are mainly used by investors to determine these points of
support and resistance.
4. TREND LINE
• A Trend Line is a straight line that connects two or more price points
and then extends into the future to act as a level of support or
resistance.
• There are two types of trend lines: upward trend line and downward
trend line.
• Trend line is an aspect of technical analysis that uses line studies to try
and predict where the next price move is likely to head to.
• A trader wanting to trade Gold metal online using technical analysis must
know how to draw and interpret the trading signals generated by this
trend line trading tool.
5. TREND LINE ANALYSIS
• Trend line analysis is based upon the idea that the market prices of Gold move in
trends. The trend lines show three things about the current market trend, these
are:
1.The general direction of the market - whether up or down
2.The strength of the current move
3.Where future support and resistance points will likely be located
• If a trend line forms in a particular direction, then the market usually moves in
that direction for a period of time until the time when this trend is broken.
• When the trend is broken the trend line will also be broken - meaning price will
move below an upward trend line or above a downward trend line.
• Plotting trend lines on Gold charts shows the general trend of the Gold prices -
which can either be upward or downward.
8. DRAWING TREND LINES ON GOLD
TRADING CHARTS USING META TRADER 4
PLATFORM
• The Meta Trader 4 Gold trading platform software provide technical charting
tools for drawing these trend lines on the XAUUSD Gold trading charts.
• To plot trend lines on a Gold trading chart just click the line drawing tool shown
above on the Meta Trader 4 technical analysis software and select point A where
you want to start drawing the line and then point B where you want the it to
touch.
• You can also right click on the trend line and after right clicking on it, on the
"properties" option select the option to extend its ray by ticking the "ray check
box", if you do not want to extend it, then uncheck this option in your Meta
Trader 4 platform. You can also change other properties such as color and width
of the trend line on this property settings pop up window.
• "The trend is your friend". Is a popular saying among investors because you
should never go against the trend.
• The trend is the most reliable method to trade Gold prices because once prices
start to move in one direction they can move in that particular direction for quite
some time - therefore using this method presents you with the best chances to
make profits from the online Gold metal trading market.
9. META TRADER 4 PLATFORM TREND
LINE DRAWING TOOL
• Gold traders can
use the drawing
tools provided on
the Meta Trader
4 software as
shown below to
draw these trend
lines.
10. PRINCIPLES OF HOW TO DRAW TREND
LINES
• Use candlestick charts to draw trend lines.
• The points used to draw the trend lines are along the lows of the price bars
in an upward trend market.
• An upward bullish moving trend is defined by higher highs and higher lows.
• The points used to draw are along the highs of the price bars in a
downward trend market.
• A downward bullish move is defined by lower highs and lower lows.
• The points used to plot trend lines are extremes points - the high or the low
price.
• These extreme points are important because a close beyond the extreme tells
investors and traders that the trend of the XAUUSD Gold metal prices might be
changing. This is interpreted as an entry or an exit signal.
• The more often a trend line is hit but not broken, the more powerful its trading
signal is.
11. WAYS OF TRADING TREND LINE
• There are two main ways of trading this setup:
• The Bounce
• The Break
12. TECHNICAL ANALYSIS OF THESE
TWO METHODS
• The trend line bounce is a continuation signal where price bounces off this trend line and
continue moving in the same direction as the trend line.
• In an upward trend move, the market will bounce upwards after hitting this level which is the
support level.
• In a downward trend move, the market will bounce downwards after hitting this level which is
the resistance level.
• The trend line break is a reversal signal where the market goes through the trend line and
starts moving in the opposite direction.
• When an uptrend is broken then the sentiment of the market reverses and becomes bearish.
• When a downtrend is broken then the sentiment of the market reverses and becomes bullish.
• For very strong trends, after this trend line break signal, the price will consolidate for some
time before moving in the opposite direction.
• For short term trends then this trend line break signal will mean price may reverse
immediately.
• In Gold metal trading, both the trend line bounce and the trend line break that are used in
technical analysis charts are based upon these levels being support and resistance levels.
13. USING TREND LINES AS ENTRY SIGNALS, EXIT
SIGNALS AND FOR SETTING STOPS
• This trend line trading method is used to determine good entry and exit points for
opening and closing Gold trades, protective stops are placed just below or above
these trend lines.
• The trend line bounce is a low-risk entry method used by investors and traders to
place entry trades after price has retraced but the price is still within the trend
direction.
• Trades are setup along these trend line levels and a stop loss placed just above or
below the trend line.
• The trend line break is a crucial indicator of possible price trend reversal. When a
trend line is broken the price starts move in the opposite direction.
• This provides an early exit signal for investors and traders to exit their open trades
and take profits.
• When there is a penetration of these trend line levels, it is a signal that the price
may reverse start moving in the opposite direction.
• Unlike other technical analysis indicators there is no formula used to calculate trend
lines, this trend line formation is just drawn between two chart points and a trader
has to learn how to draw these trend lines on their Gold metal trading charts.
15. TECHNICAL ANALYSIS OF MORNING
STAR PATTERN
• Morning star is a three day bullish reversal candlestick pattern.
• The first day is a long black candlestick.
• The second day is a morning star that gaps away from the long black
candlestick.
• Third day is a long white candlestick that fills the gap.
• The filling of the gap and closing of the white candlestick above the gap
is a strong bullish trading signal.
• Traders should open a buy trade after market price closes above the gap
formation of the morning star candlestick pattern. This is the
confirmation signal of the buy signal generated by this morning star
candlestick pattern.
17. TECHNICAL ANALYSIS OF EVENING
STAR CANDLESTICK PATTERN
• Evening star is a three day bearish reversal candlestick pattern.
• The first day is a long white candlestick.
• The second day is the evening star that gaps away from the long white
candlestick.
• Third day is a long black candlestick that fills the gap.
• The filling of the gap and closing of the black candlestick below the gap is
a strong bearish trading signal.
• Traders should open a sell trade once the market prices close below the
gap formation of the evening star candlestick pattern. This is the
confirmation signal of a sell signal generated by this evening star
candlestick pattern.
19. TECHNICAL ANALYSIS OF BULLISH AND
BEARISH ENGULFING PATTERNS
• The color of the first candlestick indicates the trend of the day.
• The second candlestick should completely engulf the first candlestick and
it should have the opposite color.
• For Bullish Engulfing the color of the candlestick should be Blue.
• For Bearish Engulfing the color of the candlestick should be Red
