The Daily Trade – Day 16

Filed under: Learn Forex Trading |

 

Trade Number 16 – AUD/USD 1 Hour Chart

 

Figure 1.


I had a trade on the AUD/USD 1 hour chart yesterday which came off very nicely to the downside. It came after price moved back through the very strong support/resistance level at around 1.07700. Price blasted through this level with very strong momentum before retracing back to it (see Figure 1). At this point, I started looking at the 1 hour and 4 hour charts to try to spot any price action signals. One came on the 1 hour chart after the move back up. Four nice pin bars emerged followed by a bearish engulfing pattern. This was the signal to get in before the downwards momentum continued. My stop loss was just above the high of the move and I aimed for two times my risk, as the next logical support was just below this level (see Figure 2).

Figure 2.

 

As you can see from Figure 3, price did move back down as expected and hit our target for a 2% rise on the bank. After that, it is interesting that price once again moved back up to the same support/resistance zone before bouncing off it again and moving back down with even more force. This confirmed the strength of this level once again. It has been a very strong level for over two months now – so we should continue to watch this area for any future price action signals. I hope you have enjoyed this trading example today, and I hope the simplicity of it will help you in your own trading. It is easy to make trading complicated and use too many indicators and formulas, but when it comes down to it, trading is all about psychology and crowd behavior. Personally, I prefer to keep things simple and keep the chart as clean as possible. I will be back tomorrow with another trading example.

 

Figure 3.

 

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