Live Trade Number 16 – ANALYSIS and RESULT

Filed under: Live Trades |

Unfortunately, our live trade number 16 did not come off as we’d hoped. However, I am still happy with the setup and I would like to talk you through it right now.

Figure 1.

First, take a look at Figure 1, which is the daily chart for the NZD/USD forex pair,  and the blue horizontal band. This is the area of support/resistance that we are looking at. As you can see, this area had been reacted to five or six times in the past three months or so, making it a very significant zone. The last of these reactions was at the end of November, and I have marked this high point with a thin red horizontal zone. You will see that price had been approaching this blue band once again, so this is a place to look out for any price action signals on the daily, 4-hour, and 1-hour charts. I have also marked in a Fibonacci retracement tool on the daily chart, as price is also approaching a 61.8% retracement.

 

Figure 2.

Next, take a look at Figure 2. You will see that price stalled exactly at our thin red line in the blue band, and could not close above this red line. You will also see that a bearish engulfing pattern formed here. I have also looked at the Bollinger bands, and found that price was at an upper extreme here. So, with the comfort of a confluence of signals, I felt that a short trade was a high probability set up and I took a short trade at a 50% retracement of the bearish candle with a stop loss just a few pips above the high of the move, and a target of three times my risk. Unfortunately, if you look at Figure 3, you will see that this just did not come off. We cannot win them all.

Figure 3.

Trade 16 = -103.11

Total Profit/Loss for test = +500.54 GBP

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