Gold trading online

How to Use Trend Lines to Inform Your Trading

The most important piece of advice in forex gold trading is learning to follow the trend. The trend is your friend! You don’t want to swim against the current; you want to go with it. You just need to figure out which way the current is flowing. The most efficient way to do that is by drawing trend lines. Please read on to learn how to successfully draw trend lines to help with gold trading:


Drawing Trend Lines


There are a number of things to remember when drawing a trend line:

  • A trend line should always be straight.
  • A trend line should not cross any of the wicks.
  • If a trend line is broken, you will have to redraw the trend line.
  • The price should touch the trend line at least three times to confirm that the trend line is real. If it only touches twice, it is only a tentative trend line and you can not be sure that a trend actually
  • A trend line should be approximately 45 degrees. If a trend line is too steep, then it is not sustainable. If a trend line is too flat, then it may be a weak trend and can be broken easily.


Drawing Uptrends


When drawing an uptrend, the trend line is always drawn below the chart. The line should connect the low points of the wicks on the chart. This creates a support line, which means the prices are unlikely to buck the trend line and will bounce off of it if it touches again.


Drawing Downtrends


When drawing a downtrend, the trend line is always drawn above the chart. The line should connect the high points of the wicks. The trend line becomes a resistance line in this case. Similarly to a support line, the resistance line shows that the prices are unlikely to rise above the trend line.


Trend lines are a very simple concept that a lot of experienced Forex traders fail to follow. They are easy to draw; you just have to follow what the charts tell you. Make sure you don’t try to force the lines to fit your vision. When you read the chart and use the knowledge you’ve gained here, you should be able to understand where gold prices have been and where they are trending. You can make a fortune using these strategies while trading gold online.

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