The Daily Trade – Day 20

Filed under: Learn Forex Trading |

Trade Number 20 – GBP/USD 1 Hour Chart

 

Figure 1.

Wow – we’re up to day 20 on the daily trade already! I can’t believe how quick it has gone… Anyway, on to today’s trade. This is yet another trade on the GBP/USD chart at the same support/resistance level that we discussed on Monday. Price moved back down to this congested zone and this time, I found a trading opportunity on the 1 hour chart (see Figure 1.).

 

Figure 2.

As you can see from Figure 2, there was some good bearish momentum on the 1 hour chart until price reached this very significant level of support. Then, there was an indecisive candle with a long pin bar tail, followed by a bullish engulfing candle, which also had a long tail, suggesting that price had once again rejected this level. At this point, had I seen the trade (I am not trading this week due to moving back to the UK) I would have placed a stop loss a few pips below the low of the engulfing candle, and a target of two times my risk – which would have been just below the last pivot high on the one hour chart.

 

Figure 3.

If you now look at Figure 3, you will see that price did indeed, once again, rebound off this strong support zone and make a nice short term bull move – which would have easily hit our target in four to five hours, for a nice quick profit of 2% of our bank. Since then, price has begun to move back down again so we should watch this level again for any more price action signals. That’s it for today, but I will be back once more tomorrow with yet another price action trading example. So until then, happy trading and good luck.

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