The Daily Trade – Day 47

Filed under: Learn Forex Trading |

Trade Number 47 – AUD/USD 1-Hour Chart

Hello everyone, and welcome to today’s edition of “The Daily Trade”. What I have for you today is a trade on the AUD/USD 1-hour chart. This is a very good trading example so please, read on…

 

Figure 1.

To begin with, take a look at Figure 1. as this is key. This is the daily chart, and at the bottom of it you will see a green zone with a thin red line drawn through it. From November 2010 to March 2011, this zone acted as a very strong area of support and it was respected at least four times before price finally managed to break through it. After that, price continued to move up for while and maintained the dominant up-trend.

 

In August, price moved back down to this zone and there was a nice change of polarity, and our old resistance area became a new support zone. This was respected at the beginning of August and price was unable to close below this zone. So when price moved back down to this same zone a few days ago, I was on the lookout for any price action signals on the daily and intraday charts.

 

Figure 2.

If you now look at Figure 2., you will see that there were a number of signals at this zone on the 1-hour chart. Firstly, there were a series of long pin bars, which you could have taken as an entry. The best entry would have been the second bullish engulfing pattern, as this came after a very nice move down and was just at the right area and confirmed what the pin bars were hinting at.

 

Figure 3.

Now, if you look at Figure 3., you will see that price bounced up very nicely from this level and any of these entries, providing that your stop loss had enough room to breath, should have made a good profit with a risk reward of 1:2. Well, that’s it for today – more tomorrow.

 

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