The Daily Trade – Day 29

Filed under: Learn Forex Trading |

 

Trade Number 29 – EUR/USD 1 Hour Chart

 

Figure 1.

There was another nice trade example on the EUR/USD chart last week. This pair had been very choppy and stuck in a trading range, but that does not mean there are no good trading opportunities. The top end of the range had been firmly respected on two occasions in the past one and a half months (see Figure 1.). After some horrendous up and down price action that is reminiscent of an earthquake, price moved back up to this level, where we could have been watching for any price action signals on the intraday charts.

 

Figure 2.


If we now zoom in to the 1 hour chart (see Figure 2.), you will see that there was a strong move up, followed by a bearish engulfing pattern, which suggests that the bears are taking over and that the chances of a move down are increased. This happened just a few pips below our zone of interest, so it was in the right area, and this coupled with the bearish signal gave us some nice confluence to work with.

 

Figure 3.

We could have taken this trade with a stop a few pips above the high of the move to allow for the spread, and a target of two times our risk. If we now zoom forward in time and look at Figure 3, you can see that our target would have been met in around 24 hours for a 2% rise on our bank in a relatively short space of time. I must once again emphasize that I do not post all of my trades on this blog, and that abut 50% of my trades hit my stop loss. However, with a positive risk-reward, this allows us to come out on top in the long run.

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