FX:XAUUSD   Gold Spot / U.S. Dollar
Hello Traders,

I’ve been watching FX:XAUUSD for about a week and been trying to find a setup for entering into the strong bearish trend , at least for the short term. Zooming out the price action chart, I was able to recognize a really well developed chart pattern which is called the descending triangle . These types of triangle are usually taken as bearish signals and they can form in both bullish and bearish trend markets.This type of triangle patterns form when market price gets very volatile and later begins to consolidate into a tight range. This consolidation phase gives us (the traders) time to setup our entry when a breakout occurs. In descending triangles the sellers are continuously putting pressure on the buyers, which results in the formation of lower highs and strong support level .

The first primary target, after getting the breakout to the downside, is equal to the height (x) of the descending triangle . I have also labelled two additional major target levels, if you are planning to have more than one shorting position for this setup. The first major target level is very close to the 2nd and 17th December lows. The last major target is the bottom of the consolidation zone, which could potentially act as strong support level . Once the downside breakout has formed, stop loss will be placed above the falling trend line ( trend line connecting the “a”, “c”, and “e” points). A breakout to the upside would invalidate the bearish triangle pattern .

I have also attempted to label the price action within the descending triangle by using Elliot Wave Theory. If there are any mistakes in my wave count, please don’t hesitate to point them out, as I really want to understand this theory the correct way.

Please feel free to AGREE or DISAGREE with this idea by leaving a comment below. Hit that thumbs up button (top left corner of this chart) if you like the idea. Thank you everyone for all the SUPPORT that you have given me so far, I truly appreciate it. Good luck everyone :)

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Comment: UPDATE #1: Hello Traders, good news, got a strong breakout to the downside. Got filled close to the breakout. Trade is active now :)

Trade closed: stop reached: Stop loss reached traders. All short positions are now closed.
The chart didn't appear in the update section, so here is it again :)

I like more long-term plans, thus gold is that low now, that there can't be much room below.
+1 Reply
Hey mate, it's good that you like long-term plans. Those are the ones that will make you good amount of money. Since there is not much room below, I planned this setup to be short-term :)
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