The Daily Trade – Day 23

Filed under: Learn Forex Trading |

 

Trade Number 23 – EUR/GBP 4 Hour Chart

 

Figure 1.

There was a trading opportunity on the EUR/GBP chart today at an area of support/resistance that we have looked at many times before. The support/resistance “zone” is around the 0.87440 level, and as you can see from Figure 1, it has been respected numerous times (more than ten), in the past five months or so. With price recently moving back up, we have been looking for retracements back to this zone and trying to spot price action signals to tip us off for a continuation of that move.

 

Figure 2.

When price re-entered the zone in question, a nice pin bar emerged after an inside bar on the 4 hour chart (see Figure 2), which was something of a fake move. On the 4 hour chart, our zone has been respected like this with four or five pin bars very recently. You could have entered this trade with a very tight stop, just a few pips below the low of the pin bar, and made your target at least two times the risk.

 

Figure 3.

Now, if we look at figure 3, you will see that price did indeed move back up for a while, and would have hit a target of two times our risk very comfortably. However, since then, price has started to come back down, so if your target was more than two times the risk, then you would still be in the trade and wondering if it might be better to get out at breakeven. I personally like to let all my trades run to either my stop or my target, as I find that I am less profitable if I meddle with my trades. But this might not be the case for other people – and it is very much a personal decision. Well, that’s it for today, I hope you have enjoyed this trade example. I’ll be back with more tomorrow.

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