Live Trade Update – AUD/USD

Filed under: Live Trades |

I would like to update you on a live trade on the AUD/USD forex currency pair (the pair for the Australian dollar and the United States dollar) that I took  recently, as there have been a few new developments.

 

Figure 1.

Figure 1.

If you take a look at Figure 1, you will see the daily chart for the AUD/USD pair, and this is the only timeframe that we will really need to look at for this particular trade. We entered this trade at a 50% retracement of the pin bar that rejected the area of support/resistance at the top of this chart (marked with a horizontal green band). Originally, I had a risk-reward scenario of 1:3, with the stop loss being placed just a few pips above the high of the pin bar.

 

Yesterday, there was a lot of bearish momentum in the market, and our target was just a few pips from being reached before price rejected this area and moved back up, creating a bearish candle with a very long tail. In hindsight, the target should have been set a little higher, as this was also a minor level of support/resistance. Therefore, at the close of yesterday’s candle, I moved my stop to breakeven as a precaution. Moreover, I have now also changed my target, aiming for a risk-reward of just 1:2 instead of 1:3, as I am now weary that price might soon become more bullish. However, it looks like this target should be reached very soon, as price is already hovering around that level.

 

What is clear from this trade is that targets should be set at logical levels rather than at a set risk-reward target level. I was a little inflexible and lazy with this risk-reward setup of 1:3, and in hindsight, the target should have been set just a few pips higher.

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