Live Trade 104 – Analysis and Result

Filed under: Live Trades |

In hindsight, I think this may have been a case of taking a trade that wasn’t really there. We have had so few trades recently that I was getting tired of sitting on my hands. This can be a mistake (as is demonstrated here). Don’t get me wrong, it wasn’t a terrible trade; but it is perhaps one that I wouldn’t have taken had we already got three or four trades in the market.

The trade in question came on the AUD/CAD pair, which for those of you that don’t know is the pair for the Australian dollar and the Canadian dollar. To begin with, take a look at Figure 1. This is the daily chart for the AUD/CAD pair. As you can see, the chart visibly moves down from left to right, which tell us that the market is bearish. This bearish momentum is confirmed by the fact that the 8-day exponential moving average is crossed below the 21-day exponential moving average, and it has been for some time. In this kind of market, we want to be trading in the direction of this bearish momentum, so we should only be on the lookout for price action signals that confirm this momentum.

If you now look at Figure 2, you will see the 4-hour chart for the same AUD/CAD pair. What you can see here is that price was moving down before forming an inside bar and a pin bar fake out. I went short at the break of this pin bar, and unfortunately our stop took us out of the trade. In hindsight, perhaps we should have waited for a break of the mother candle of the inside bar; and the area of support/resistance was also a little weak. So that is another loss for us I’m afraid. More next week…

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