Live Trade – GBP/USD

Filed under: Live Trades |

I had a live trade fail on the GBP/USD pair today (the pair for the British pound and the United States dollar), and I would like to talk you through this setup right now.

Figure 1.

Figure 1.

 

This trade setup was not a classic price action setup by any means, and it was more of a discretionary trade really. Figure 1 shows the basic setup. This is the daily chart for the GBP/USD pair. What you can see, is that price has been moving down with a lot of momentum, before hitting this rather strong area of support/resistance (which also happens to be a 50% Fibonacci retracement area). As there had been two previous bearish pin bars at this area, this told me that price was struggling to bounce and move higher, and that the market had rejected these higher prices. These two bearish pin bars also happened to form an inside bar setup, which tells us that price is consolidating and taking a breather.

 

Figure 2.

Figure 2.

Therefore, what I did, was to put an order in to go short at the break of the low of the mother candle of the inside bar setup, with a stop loss placed at a 50% retracement of the mother candle of the inside bar, and target set of two and a half times the risk. The idea was that once this low was broken, that the market might fall away, as there are no other logical levels of resistance for quite a while.

 

However, Figure 2 shows the result of this trade. The worst possible thing that could have happened on this trade did happen. Price just slightly broke the low of the mother candle by just a few pips, initiating our trade, before going straight back up and hitting our stop loss. It seems that we got ahead of ourselves here, and no confirmation was really given that the level of support/resistance had been broken. We will learn from this one. More tomorrow…

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