Live Trade Number 97 – ANALYSIS and RESULT

Filed under: Live Trades |

Our trade on the NZD/USD came to fruition just now (Monday as I am writing this) for a nice little profit, and I would like to talk you through the ins and outs of this setup right now to add to your forex trading education.

 

Figure 1.

Let’s begin by taking a look at Figure 1. This is the 4-hour chart for the NZD/USD pairing, which is the pair for the New Zealand dollar and the United States dollar. As you can see from the chart, there is a very obvious level of support/resistance at the upper-middle of the chart. This first acted as resistance, and then, once this was broken through, this then became support on a couple of occasions in what we call a ‘change of polarity’. Price then broke through this level yet again with some good momentum to the downside; before retracing to around a 50% Fibonacci retracement area and forming a bearish pin bar right at our level in question.

 

This kind of confluence of a strong support level, a Fibonacci retracement area, and a price action signal, all tell us that the odds have been tipped in our favor. Therefore, I put an order in at the break of the low of the pin bar, with a stop loss just a few pips above the high of the move, and a target of two and a half times our risk. I also set a trailing stop of one times our risk as some insurance.

 

Figure 2.

Figure 2 shows that our order was filled and price temporarily moved against us before moving nicely downwards. Our trailing stop was eventually hit but not before we had locked in around a 1% rise on our bank. Here is the official result.

 

Trade 97 = +99.58

 

Bank = 9,642 (-3.58%)

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