The Daily Trade – Day 70

Filed under: Learn Forex Trading |

Trade Number 70 – AUD/USD 1=Hour Chart

Good morning everyone – and welcome to a brand new week and a brand new trading example. What I have for you today is a trade on the AUD/USD chart. It all begins as usual with our key support and resistance levels on the daily chart for the AUD/USD forex currency pair. So if you look at Figure 1, I’ll get right on with explaining…

 

Figure 1.

As you can see, there is a very nice area of support/resistance in the middle of the chart marked by a green zone (around the 1.01873 area). This has been respected four or five times in the past year or so, making it a very strong area to look out for any price action signals at. As price was loitering around the area, I had it marked as being ripe for a possible trade.

Figure 2.

 

If you now look at Figure 2, you will see that a very nice bullish engulfing pattern formed at the zone in question. This candle and the previous one also had nice little tails, which is always just that added bit of confirmation that a level is being rejected. A long trade could have been taken here with a stop loss just a few pips below the low of the move. A standard minimum risk-reward of 1:2 could have been set, making a target of two times your risk. So if your risk is 1% of your bank, then your target would be 2%.

 

Figure 3.

Figure 3 shows that price moved up very nicely after another very long-tailed candle / pin bar, and would have reached a price target of 1:2 for a very quick profit. These kinds of setups happen every day on the forex markets – so all you have to do, is start finding some!

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