Live Trade – AUD/USD

Filed under: Live Trades |

I currently have a live trade order on the AUD/USD forex currency pair, which has yet to be filled – and I would like to talk you through this trade setup right now.

 

Figure 1.

Figure 1.

To begin with, take a look at Figure 1, which is the daily chart for the AUD/USD pair. What you can instantly see here is that the pair is in a very, very powerful downtrend. The 8-day exponential moving average is crossed well below the 21-day exponential moving average, and they continue to move wider apart. This is indicative of a strong trend, and as such, in this scenario, I would only really be looking out for any bearish price action signals to try to hop on to this bearish momentum.

 

Such a signal has formed in the guise of a bearish pin bar. This is already a strong signal in such a strong bearish trend, but to add to this, there is also an area of support/resistance that the pin bar rejects (marked with a horizontal red line). This is a classic case of old resistance becoming new support. Therefore, I have 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 no target set at all – intending to manage the trade. The only thing to be aware of with this trade is another area of resistance coming around 1.5 times the risk away from the entry. This is an important area, and if price reacts to it, then it might be wise to exit or move stops. If not, then we could ride the trend further. However, this order has not yet been filled, and we will have to monitor its progress, and watch out for any reactions at that important level.

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