Live Trade – AUD/USD (daily chart)

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I had an unsuccessful live trade this morning on the AUD/USD forex currency pair, and I would like to talk you through this trade setup right now.


Figure 1.

Figure 1.

If you take a look at Figure 1, you will see the daily chart for the AUD/USD pair, and this is the only timeframe that we will need to look at for this particular setup.What you can see here is that the pair is currently in a bearish downtrend. The 8-day exponential moving average has crossed below the 21-day exponential moving average, and in recent trading days the pair has plummeted downwards with some very large bearish black candles. I have marked in an area on the chart (marked with a horizontal green band) that is a significant level of support/resistance, so, when price broke through this level, I was on the lookout for any retracements back up to that level to see if any price action signals formed that would confirm the resumption of the bearish trend.


When a bearish pin bar formed right at our area of support/resistance, I put an order in to go short at a 50% retracement of the pin bar, with a stop loss placed just a few pips above the high of the pin bar, and a target set of two times our risk. This order was filled, but unfortunately, as you can see, our stop loss has since been hit for a 1% loss on our bank. What is interesting though, is that it seems as if another pin bar is now forming on the daily chart. Of course, anything could happen throughout the trading day, but if the candle closes somewhere near where it is now, then it could be another bearish signal. I will keep you updated on this, but of course, tomorrow is a non-trading day as it is a forex holiday. Have a great end to 2012 and see you in 2013 for more forex price action examples!

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