The Daily Trade – Day 15

Filed under: Learn Forex Trading |

Trade Number 15 – AUD/USD 1 Hour Chart

Figure 1.

For today’s daily trade example, I’d like to draw your attention to a trade on the AUD/USD chart at the end of July. I was alerted to this setup when price retraced to an area of support/resistance which had been rejected on four separate occasions in the past two months on the daily chart (see Figure 1). It was previously a resistance area but a change of polarity saw it being used as support. Although price did not quite reach this zone, I realized that I should have probably drawn the zone a little wider based on the last bounce.

Figure 2.

When zooming in to the 1 hour chart, I saw that there was a nice little pin bar after an inside bar, which was something of a fake move, followed by a bullish engulfing pattern (see Figure 2.). This was a very nice looking setup, and there was a good deal of confluence suggesting a continuation of the move upwards. I took the trade with stop loss place just below the low of the pin bar, with my target just two times my risk.

 

Figure 3.

This trade played out very nicely, with our target being met in under twenty four hours (see Figure 3.). Price moved up quite well after our entry, before retracing about fifty percent, and forming another nice pin bar and continuing upwards. This is yet another good example of using support/resistance zones to spot good price action entry signals on the intraday charts, and going with the longer term trend. All these elements put the odds significantly in our favor, and by doing this, we are bound to come out on top in the long term. There may be short term fluctuations and losses, but over a decent volume of trades, as long as we stick to our method, we should be profitable. That’s it for today – so good luck finding your own price action trading setups.

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