The Daily Trade – Day 66

Filed under: Learn Forex Trading |

Trade Number 66 – USD/CHF 1-Hour Chart

Welcome to yet another edition of “The Daily Trade”. As I’ve given a lot of trade examples involving engulfing patterns of late, I’d like to show you something a little different today.

 

Figure 1.

The USD/CHF daily chart (see Figure 1) has been stepping up lately and there was a nice resistance level in September, which then became support after a change of polarity. This confirmed the strength of the level and price has recently been moving back down toward this very same “zone” (which I have marked with a thick green background line).

Figure 2.

 

If you now look at Figure 2, you will see that price moved well into this green zone on the 1-hour chart, before a very long bullish pin bar formed. This kind of candle sticks out like a sore thumb on the chart (or at least it should). As this is right at the level that we are looking out for any price action signals, it would be a good time to take a long trade with a stop loss just a few pips below the low of the pin bar to allow for the spread. You should be looking at a risk-reward scenario of at least 1:2 here, so that would be a target of at least two times you risk. So if you are risking 100 GBP, then your reward should be a profit of at least 200 GBP.

 

Figure 3.

Figures 3 demonstrates that price did indeed pop up at this level and react to it. There were two very nice bullish candles after this pin bar, which were good enough to reach a target of two times your risk for a 2% rise on your bank (if you were risking 1% of your bank like I do). That’s it for today. More tomorrow…

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