How to Trade a XAUUSD Downtrend
Down xauusd trend is when the price of a xauusd chart is moving lower & lower. XAUUSD prices generally close lower than where they opened.
How to Trade Downwards XAUUSD Trend: XAUUSD traders use the downwards xauusd trend direction to open sell xauusd trades
Drawing a Downwards XAUUSD Trend Line
When it comes to learning how to draw a downward xauusd trend line, you need to know that when the xauusd market is bearish it forms lower lows & lower highs forming a downward general xauusd trend direction - downwards gold trend. These are the points that are used to draw a downward xauusd trend line.
To draw downward xauusd trend setup we use resistance levels and to do it correctly two resistance areas are needed. When gold trading price touches this downwards trend line, then we open sell gold trades & place stop loss just a few pips above the sloping resistances:
How to Trade a Downtrend? - Strategy for Trading a XAUUSD Downward Trend
Trading This Down XAUUSD Trend Market Move
When trading with this down xauusd trend method, this downward trend setup will show the general direction of the market as downward therefore xauusd traders will only open short sell gold trades. These resistance levels are the levels where if gold trading price retraces then these points will provide strong resistance. This is why many xauusd sellers will wait until gold trading price retraces upwards & hits these retracements levels to open sell gold trades. Trades opened at these levels have a high Reward to Risk Ratio and have little drawdown.
For Example, in the above downwards xauusd trend example, a trader would have opened short sell signals at the resistance 1, resistance 2, resistance 3 and these sell gold trades would have been opened with minimum amount of draw down/retracement.
How to Draw a Downward Gold Channel
A downwards xauusd channel is plotted by drawing a line that is parallel to the downwards xauusd trendline and then adjusting it to touch the bottom boundary of the gold price movement. This then forms a channel and as long as the trading price stays between these two channels the general market down xauusd trend direction is intact the xauusd market direction will continue being bearish.
How to Draw a Downward XAUUSD Channel - Downward XAUUSD Trend Trading Strategy
Trading the Downwards Gold Channel
The downward xauusd channel is used by traders to show levels where it best to take profits. Traders will take some profit once the gold trading price touches the lower channel or the lower channel and wait for another retracement before opening a short sell gold trading again.
