Best Candlestick Pattern For Trend Trading Gold XAUUSD

This secret pattern will change the way you trade Gold XAUUSD.

If you study technical analysis in Gold trading, there is one unique candlestick pattern that you absolutely need to know.

In this article, you will learn the structure and the meaning of one of the most accurate candlesticks in Gold trading.

I will teach you how to recognize this pattern and how to trade it for maximum profits.

Pattern Base

Let's start with some theory and let me show you how this candlestick pattern looks.

This candlestick pattern is called inside bar.

It is based on a combination of at least 3 candles.

The first candlestick in a sequence should be a strong bullish or bearish candle. The consequent candles should strictly close within its range.

If at least 2 candles close within the range of the first candle with its bodies, that will be a valid inside bar.

The first candle will always be called the mother's bar, while the following candles will be called the inside bars.

That's a perfect example of the inside bar pattern on Gold XAUUSD chart on a daily.

Essential Components

This pattern is based on 2 important elements that you should always pay close attention to.

The upper boundary of the range of the mother's bar will compose a significant resistance that will provide a safe place to sell.

While the lower boundary of the range of the mother's bar will be a strong support to buy Gold from.

Look how nicely Gold price respected the resistance of the range, dropped to its support and started to grow then.

How to Trade

Once you identified the inside bar, you can easily trade it within the range.

However, I strictly recommend waiting for a confirmation signal before you place a trade.

One of the proven confirmations is a price action signal on lower time frames.

In the example above, Gold formed a bullish chart pattern - double bottom after a test of a support and a bearish pattern - head and shoulders after a test of a resistance.

Breakouts

Remember that the market can not stay within the range of the inside bar candlestick pattern forever.

Bullish violation and a candle close above the range will be a strong signal to buy Gold.

While, a bearish breakout of its range will provide a strong bearish confirmation.

That's how a breakout of the underlined resistance triggered a strong rally on Gold.

Inside bar is the essential pattern both for the gold swing traders and day traders.

This pattern provides a lot of profitable trading opportunities, being very simple to recognize.