Live Trade Number 26 – ANALYSIS and RESULT

Filed under: Live Trades |

I’d like to talk you through our live trade number 26 just now. This one was a setup on the EUR/GBP pair, and it was great looking setup but once again, it did not come off for us. What we have to remember is that even the best-looking setups only have a 50-60% chance of success. If we had these figures, then in the long term with a risk-reward ratio of over 1:2, we would be making very good profits indeed.


Figure 1.

To begin with, take a look at Figure 1 and you will see the daily chart for the EUR/GBP forex currency pair. It shows that the trend is down, and that price has pulled back to a previous area of support/resistance in what we call a change of polarity. This is usually a very high probability setup, so we should be looking our for any price action setups here on the daily, 4-hour, and 1-hour charts. There is also a 38% Fibonacci retracement here.


Figure 2.

If you now look at Figure 2, you will see the 1-hour chart for the EUR/GBP pair. Here, you will see that there is a negative divergence on the RSI indicator, and that there is a marginally bearish engulfing pattern. In hindsight, this bearish candle was not strong enough, and I was swayed by the four candles with long upper shadows, suggesting that a move downwards might be imminent. I set an order 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.


Figure 3.

Figure 3 shows that the trade failed, despite being in profit of 1% of our bank at one stage. Here are the official results:


Trade 26 = -96.28 GBP

Total bank = 10,303.91 GBP (+3.03%)




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