The Daily Trade – Day 64

Filed under: Learn Forex Trading |

Trade Number 64 – EUR/USD 1-Hour Chart

For the final “Daily Trade” example of this week, I would like to draw your attention to the EUR/USD forex currency pair. This is one of the major pairs that are traded, as it is one of the most liquid. So let’s take a look as usual by examining the daily chart.

 

Figure 1.

Figure 1 shows that price has been moving downwards recently but has now retraced to a 50% Fibonacci retracement area. Price is also at a level of support/resistance that has been respected three or four times in the past nine months or so. This confluence of signals means that it is a very good area to be looking out for any price action signals on the intraday 4-hour and 1-hour charts.

Figure 2 displays exactly the kind of signal that we should be looking out for – a bearish engulfing pattern (see past articles for a full explanation of this price pattern). This signal is right on our support/resistance zone, so it is a great place to take a short trade with a stop loss just a few pips above the high of the move. A good target in this scenario would be at least two times our risk – so that is a risk-reward of 1:2.

 

Figure 3.

Figure 3 shows the result of this trade. Price went slightly against us for a while and came uncomfortably close to our stop loss before plummeting downwards. Our target was met and a 2% rise on our bank was gained. This represents another good example of price action trading. Well, that’s it for this week, and I’ll be back on Monday for more. Have a good weekend and don’t forget to adjust your support/resistance levels sometime over the weekend ready for the following week!

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>