Forex Trade Setup Example – USD/CHF

Filed under: Learn Forex Trading |

Rather than take you through a trade that I have made as usual, today, I would like to take you through a setup and a trade that has not yet been entered.


Figure 1.

If you take a look at Figure 1, you will see the daily chart for the USD/CHF forex currency pair. You will see that I have put an order in to take a short trade. My entry is shown at the green dotted line, my stop loss at the upper red dotted line, and my target at the lower red dotted line. You will also notice that the distance between my entry and my target is about two times greater than the distance between my entry and my stop. This gives us a nice risk-reward scenario of 1:2 – that is, my risk is 100 GBP and my potential reward is 200 GBP.


Just above my entry point, you will see that I have marked in a short green band. This is an area of support/resistance. It previously held as a good resistance area, and I am now hoping that it will provide some good support. My stop loss is beyond this level, so I am hoping that this will provide some protection.


My entry is at a 50% retracement of the bearish breakaway candle. Prices often retrace a little after these big moves, but we will need a little luck to get our order filled. If the order is filled, you will be able to track the trade at:


By taking this trade, we are going with the current dominant momentum, so this helps to stack the odds in our favour. The 8-day EMA is also crossed well below the 21-day EMA, so this clearly shows that the market has become bearish; so hopefully, our order will be filled.

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