Live Trade – AUD/USD

Filed under: Live Trades |

I currently have an order in on the AUD/USD forex currency pair (the pair for the Australian dollar and the United States dollar), and I would like to talk you through the reasons for this order right now. It is a simple setup and one that I have discussed before, but it provides another good example of forex price action trading.

 

Figure 1.

Figure 1.

If you take a look at Figure 1, you will see the price action setup in question. This pair has been in a very strong bear trend with the 8-day exponential moving average crossed well below the 21-day exponential moving average, and it has been for some considerable time. A visual inspection reveals that the chart is very obviously moving down from left to right, and this all confirms the bearish momentum that is currently controlling this pair.

 

What we are looking for in this kind of bearish trend is an entry point so that we can hop onto that trend and ride some of that momentum. Off course, the tide can turn at any time, but a short trade would have probability on our side, and it is more likely to move down that up during such a trend. Therefore, when an inside bar setup emerged, indicating that the pair was taking a breather and consolidating, I put an order in to go short at the break of the low of the mother candle of the inside bar, with a stop loss placed just a few pips above the high of the mother candle, and an initial target set of three times the risk – although my plan is to manage the trade if it is entered depending upon what price action is telling us day by day. This order has not yet been filled, and we will have to see how this one pans out.

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