If you clicked this video… you've probably tried scalping, day trading, or even swinging gold! And nothing worked consistently… until now! This strategy is different - and I'll prove it!
So gold prices fool traders every day! This particular market requires perfect timing! Most traders always seem to be too early or too late!
Well, this guide combines multiple technical factors - trendline breaks, resistance-support flips, and retests - into high-probability trade opportunities. So let's break down the key components and explore why this approach can be effective, from a supply and demand perspective. This chart shows an upward trendline that's been in place for some time.
This trendline represents a series of higher lows, indicating consistent buying pressure. However, the strategy focuses on the moment when this trendline is broken to the downside. A trendline break is significant.
It suggests that buyers are no longer able to maintain the previous rate of price increase. When price breaks below the trendline, it often indicates that selling pressure is starting to overcome buying pressure. After the initial break, price often returns to the underside of the trendline.
This retest serves several purposes. It confirms the validity of the break. If the trendline now acts as resistance, it strengthens the bearish case.
Also, it provides a more favorable entry point for short trades, with a tighter stop loss. And it often traps late buyers who see the pullback as a buying opportunity, not realizing the trend has changed. From a supply and demand perspective, the area just above the broken trendline becomes a zone of supply.
Sellers who missed the initial move down are often eager to enter short positions at this level, creating additional selling pressure. The strategy also incorporates a key support level that has now flipped to resistance. This concept is powerful because it demonstrates a clear shift in market psychology.
Previously, this level acted as support, meaning buyers were consistently willing to step in and purchase at this price. This area now acts as resistance. And this indicates that previous buyers at this level are now looking to exit their positions, creating selling pressure.
New sellers view this level as an opportunity to enter short positions. And the overall market sentiment has shifted from bullish to bearish. The power of this strategy lies in the confluence of multiple bearish signals: • the broken upward trendline • the successful retest of the broken trendline • and the previous support now acting as resistance When these factors align, it creates a high-probability setup for a short trade.
The confluence of signals increases the likelihood that the bearish move will continue, because it represents a significant shift in market dynamics and psychology. The retest trade is effective for several reasons: Markets often have a "memory" of significant price levels. When price returns to a previously important level (like a broken trendline or a broken support), it often reacts strongly.
Also, many traders who missed the initial uptrend see the pullback to the trendline as a "second chance" to enter long positions. When price fails to move higher, these traders are forced to exit, adding to the selling pressure. At the same time, traders looking for short entries often wait for a retest of a broken level.
This allows them to enter with a tighter stop loss. And the retest confirms that the broken level is now acting as resistance. Understanding why buyers become trapped above this level is key.
As I said, some buyers enter long positions when price briefly moves above the previous support (now resistance) level, thinking the uptrend is resuming. Other traders see the pullback to the trendline as a buying opportunity, not realizing the trend has changed. As price fails to move higher and instead drops below the entry points of these trapped buyers, their stop losses are triggered, adding to the selling pressure.
And the realization that the trend has changed can cause panic selling among those who were previously bullish. From a supply and demand viewpoint, this setup represents a significant shift in the balance of power: We clearly have an Exhaustion of Demand. The break of the upward trendline implies that buying pressure (the demand) is no longer strong enough to maintain the previous rate of price increase.
We also have an increase in Supply: The area above the broken trendline and the flipped support level becomes a zone of increased supply. Sellers are more willing to enter or add to short positions at these levels. And this creates an Imbalance: the confluence of signals creates a situation where supply significantly outweighs demand, leading to downward price movement.
So this trading strategy combines multiple technical analysis concepts. It relies on a shift in market dynamics and psychology, as represented by the broken trendline and flipped support level. And the power of this method lies in its ability to identify situations where supply is likely to overwhelm demand, leading to downward price movement.
Now let’s look at a buy signal. This combines two key breakouts - a diagonal trendline break and a horizontal resistance break. This dual breakout setup can signal a strong shift in market dynamics, often leading to significant upward price movement.
Let's start with the trendline break. In a downtrend, price makes lower highs and lower lows. And we draw a trendline connecting these lower highs.
When price finally breaks above this trendline, it's a sign that selling pressure may be weakening. This break is step one of our “buy” signal. But a break alone isn't enough.
After the initial break, price often pulls back to the trendline. This retest is crucial. If the old resistance (the trendline) now acts as support, it confirms the breakout.
It shows that market psychology has shifted. Then, there’s the horizontal breakout. During a downtrend, certain price levels act as resistance.
When price not only breaks the downward trendline, but also pushes above one of these horizontal resistance levels, it's a strong signal. The power of this breakout comes from its dual nature. You're not just seeing one type of breakout, but two.
The diagonal breakout (the trendline) shows a change in the overall trend. The horizontal breakout shows that a specific price level, which had been holding price down, has now been overcome. From a supply and demand perspective, this setup is fascinating.
The downtrend represents a period where supply outweighs demand. Sellers are in control, pushing price lower. The trendline break suggests that this balance is shifting.
So demand is starting to overcome supply. The retest of the trendline and the previous resistance is a key moment. It's where old sellers (the supply) may try to reassert control.
If they fail – so if price bounces off the old trendline - it shows that new buyers (the demand) are now strong enough to absorb this selling pressure. The break of horizontal resistance adds another layer. These resistance levels are prices where supply previously overwhelmed demand.
Breaking through shows that demand has not just increased, but increased enough to absorb all the supply at that price level, and push even higher . It's all about market psychology. During the downtrend, traders get used to selling at certain levels.
When price breaks higher, many don't believe the move at first. They see the pullback to the trendline as a chance to short again. But if price bounces off the trendline, these shorts are now trapped.
Their stop-losses become fuel for the next move up. The same happens with the horizontal breakout. Traders who've seen price turn down from this level before may try to short there again.
If price pushes through, their stops add buying pressure. This brings us to trapped sellers. In the original downtrend, selling at the trendline or at resistance levels was profitable.
As price breaks higher, these sellers start to doubt their positions. Each push higher puts more pressure on them. Eventually, they have to buy, to cover their shorts, adding even more upward pressure.
The confluence of these signals - trendline break, successful retest, and resistance-to-support flip, creates a powerful buy setup. Volume often plays a key role here too. Look for higher than average volume on the initial breaks.
This shows strong buying pressure. Then, look for lower volume on the retest. This suggests that sellers aren't putting up much of a fight anymore .
Candlestick patterns can add extra confirmation. A strong bullish candle on the breakout, followed by small, indecisive candles on the retest, can be a good sign. It shows strong buying on the break and a lack of selling pressure on the pullback.
This strategy works well because it aligns with how markets often move. Trends don't reverse in an instant. There's usually a period of struggle as buyers and sellers battle for control.
This setup captures that battle and signals when buyers are winning. It's also a versatile strategy. You can use it on any timeframe, from intraday to daily charts.
The longer the timeframe, often the more significant the signal. One strength of this strategy is that it gives clear entry and stop loss levels. You can enter on at the confluence zone, after the retest, with a stop loss below it.
Another chart! First, you identify a clear downtrend and draw your trendline. You then mark the key horizontal resistance levels.
Then wait for a break of both the trendline and a significant resistance level. After that, you look for a pullback to retest the broken trendline and the previous resistance. This is the confluence zone.
If price bounces off this retest level, consider entering a long position. You place your stop loss just below the retest low. And you may taking partial profits at the next major resistance level, while also moving your stop to breakeven.
This strategy is about catching a potential momentum change. And the real profit potential comes if you've truly caught the start of a new uptrend. In that case, after your entry, you might see price making a series of higher highs and higher lows, the opposite of the previous downtrend.
In essence, this method is about spotting the shift from a seller-dominated market, to a buyer-dominated one. The trendline break shows the first crack in the sellers' control. The break of horizontal resistance shows that buyers are strong enough to push into new territory.
And the retest of the confluence zone shows that buyers are stepping in to support price at higher levels. When all these factors align, they provide a strong signal that market dynamics are changing. Another trade.
This chart shows an upward sloping trendline connecting the lower lows of price action. This trendline represents the overall bullish sentiment in the market, where buyers have been in control, pushing prices higher over time. The first key event is when price breaks below this upward trendline.
This is a significant moment, because it signals that the buying pressure that has been supporting the uptrend, may be weakening. The break of the trendline is the market's first hint that the balance between buyers and sellers might be shifting. Simultaneously with the trendline break, we're watching a horizontal level that used to act as support now potentially flipping to resistance.
This is a key psychological level for traders. In an uptrend, this level might have been a place where buyers consistently stepped in. Now, if price can't push back above it, it shows that these buyers are no longer defending this level.
The support flipped into resistance. And after the initial break, price often returns to "retest" the broken trendline. It's a moment where the market is deciding if the break was genuine or just a temporary dip.
During this retest, the old zones (the trendline and the support level) are now acting as resistance. If price fails to push back above this confluence area, it confirms that the previous buyers are no longer strong enough to maintain the uptrend. The power of this sell signal comes from the confluence of both a diagonal and horizontal resistance, now working together.
When price fails to break back above both of these levels, it's a strong indication that selling pressure is overcoming buying pressure . From a supply and demand viewpoint, this setup makes a lot of sense. During the uptrend, demand consistently outweighed supply at each higher low.
The trendline break suggests that this balance is shifting – supply is starting to overcome demand . The retest of the trendline and the old support level is a critical juncture. It's where the remaining demand try to reassert control.
If it fails – if price bounces off these levels – it shows that new sellers are now strong enough to absorb this buying pressure, and push prices lower. This retest trade is all you need to trade succesfuly. It’s all about market psychology.
During the uptrend, traders got used to buying at certain levels. When price breaks lower, many don't believe the move at first. They see the retrace to our confluence area as a chance to buy again, expecting the uptrend to continue.
But if price fails to push higher from these levels, these buyers are now trapped. Their stop-losses, typically placed just below their entry points, become fuel for the next move down. As price drops, these stops are hit, creating additional selling pressure.
So these trapped Buyers are practically forced to sell, to cut their losses, adding even more downward pressure to the market. As I said before, you can confirm your trade using volume. Look for higher than average volume on the initial break of the trendline.
This shows strong selling pressure. Then, ideally, you'd see lower volume on the retest. This implies that buyers aren't putting up much of a fight anymore.
If you see high volume as price approaches the confluence zone, but fails to break through, it's an even stronger confirmation. It shows that despite significant buying effort, sellers were still able to push price back down. Specific candlestick patterns can add extra confirmation to this sell signal.
Look for bearish patterns at the retest point, such as engulfing patterns, or even just long upper wicks on candles. These patterns show rejection of higher prices and can be the final piece of the puzzle in confirming the sell signal. Again, this strategy can work on multiple time frames, but the higher the time frame, generally the more significant the signal.
A 4-hour chart showing this pattern might indicate a major trend change, while a 5-minute chart might signal a shorter-term move. Now, you might think this setup anticipates reversals. And it’s true, it can pinpoint the start of a new trending move.
But you can also trade it as a continuation setup. So this chart shows a textbook example of a trend continuation pattern, marking the end of a complex pullback, and signaling a resumption of the previous uptrend. It all starts with a clear uptrend, starting from the lower left corner.
This sets the stage for our analysis, as we're looking for opportunities to join this existing trend after a pullback. After the initial uptrend, we see a pullback. This isn't a simple, straight-line retracement.
Instead, it's a complex pullback, forming a series of lower highs and lower lows. This complexity often shakes out weak hands and can make traders doubt the original trend. That’s why you’ll see a trend on one time frame, and another one on lower ones.
During the pullback, we can draw a descending trendline connecting the lower highs. This trendline acts as dynamic resistance during the pullback phase. At the bottom of the pullback, we see price repeatedly touching a horizontal level.
This level, which initially acted as resistance earlier in the uptrend, now becomes potential support. The first major signal comes when price breaks above the descending trendline. This break suggests that buyers are starting to overpower sellers .
Simultaneously, we see the horizontal level that was previously resistance, now potentially acting as support. This "flip" will be a powerful indication of a change in market structure. And after breaking this area, price often comes back to "retest" it.
This is when we’ll see if we have our confirmation, if the old resistance will now act as support. It's a key psychological moment where buyers who missed the initial break get a second chance to enter The buy signal gains strength from the confluence of both the trendline break and retest, and the support-resistance flip occurring at the same price level. I always look for a momentum confirmation during the retest, not just a simple touch of the zone.
Look for a strong bullish candle forming after the retest. This candle confirms that buyers are indeed stepping in at this level. So while this pattern might look similar to a reversal setup, it's actually a continuation pattern.
The key difference is the context - we're looking at a pullback in an existing uptrend, not a reversal of a downtrend. This is important because trading with the larger trend increases your odds. Complex pullbacks are tricky.
They last longer and have more price swings than simple pullbacks. This complexity often causes traders to doubt the original trend. Some traders who bought the initial uptrend might exit their positions during this pullback.
Others might even try to short, thinking a reversal is happening. But when price breaks the trendline and flips the resistance to support, all these traders are caught on the wrong side. Their scramble to exit losing positions or enter new long positions adds fuel to the next leg up .
The combination of breaking a diagonal trendline and a horizontal resistance level is particularly powerful. The diagonal break shows that the rate of price decline is slowing and reversing. The horizontal break shows that a significant price level, where sellers were previously in control, has now been overcome.
Together, they signal a significant shift in the balance between buyers and sellers. If you’re in doubt about a setup, check the volume! Look for increased volume on the trendline break and during the retest.
High volume on the break shows strong buying interest. Lower volume on the retest, followed by higher volume as price moves up, confirms that sellers are exhausted and buyers are taking control. This setup works because it captures a key moment in market dynamics.
The complex pullback allows the trend to "digest" its previous gains and transfer positions from weak hands to strong hands. The trendline break signals that buyers are returning. The retest and support-resistance flip confirm that the market structure has changed.
Traders who sold during the pullback are now trapped and need to buy to exit their positions. New buyers see the resumption of the trend and enter, adding further buying pressure . And of course, not every break leads to a trend resumption.
Sometimes, price will break the confluence zone, trigger buy orders, and then reverse sharply. This is why waiting for the retest and the volume confirmation is important. It allows the setup to "prove itself" before you enter.
Another trend continuation setup! Price keeps making lower highs and lower lows. This is our starting point for a sell signal.
During this downtrend, price starts to pull back. But it's not a simple, straight-line move up. Instead, we see a complex pullback.
The price zigzags, creating a series of higher lows and higher highs within the larger downtrend. As this pullback unfolds, we can draw an ascending trendline connecting the lows. This line acts as dynamic support during the pullback phase.
At the same time, we notice a support level where price has struggled to break through before. After the price breaks below both levels, we start to prepare. This is our first clue that the pullback might be ending.
Our confirmation comes in the form of a retest. Price often climbs back up to touch or slightly exceed our confluence zone. This is a key moment where sellers who missed the initial break get a second chance to enter.
Again, the sell signal gains strength from the confluence of both the trendline break, and the support-resistance flip, occurring at the same price level. While this pattern might look like a reversal at first glance, it's actually a continuation pattern. The key is context - we're looking at a pullback in an existing downtrend, not a reversal of an uptrend.
The combination of breaking an ascending trendline and a horizontal level is particularly powerful. A diagonal break shows that the rate of price increase is slowing and reversing. The horizontal break shows that a significant price level, where buyers were previously in control, has now been overcome by sellers.
And together, they signal a significant shift in the balance between buyers and sellers. If you see increased volume on the break, even better. High volume on the break means strong selling interest.
Lower volume on the retest, maybe followed by higher volume as price moves down, confirms that buyers are exhausted and sellers are taking control . And from here, it’s simple, you now have a clear level for stop loss placement. You can place it just above the confluence zone.
For profit targets, look at the previous swing lows. And although I trade this setup on gold market, it has a decent win rate on other ones, especially the crude oil market, and most blue-chip stocks. It works because it captures a key moment in market dynamics, using basic price action.
The complex pullback allows the downtrend to "digest" its previous losses and transfer positions from strong hands to weak hands. The trendline break signals that sellers are returning. The retest and resistance-support flip confirm that the market structure has changed.
Traders who bought during the pullback are now trapped and need to sell to exit their positions. New sellers see the resumption of the downtrend and enter, adding further selling pressure. Now, if you’re ready for more interesting trading methods, go ahead and watch one of these videos!
