The Daily Trade – Day 72

Filed under: Learn Forex Trading |


Trade Number 72 – AUD/USD 1-Hour Chart

Good morning everyone and welcome to yet another addition of the “Daily Trade”. This is day seventy-two of my price action trading example series, and what I have today is a trade on the AUD/USD forex currency pair.


Figure 1.

If you first take a look at Figure 1, you will see the daily chart for the AUD/USD pair. If you will see where price currently is on the right hand side of the chart, you will see that it is entering a green “zone”. These green zones are where I mark, what I deemed to be, the significant areas of support and resistance. This zone is quite strong, with it being firmly respected in May and June. There was also a gap down in price in September, which strengthened the support/resistance area as gaps in the market usually act as good areas of support and resistance. There is also a 61.8% Fibonacci retracement area right a this zone as well. So all these elements add up to represent a nice confluence of signals – and this is what we want to see before making a trade.


Figure 2.

If you now look at Figure 2, you will see that a nice bearish engulfing candle formed just above this zone. Now, you might think that this signal is not valid because it has moved out of the zone – but I don’t see it that way. As the daily candle has not closed above this zone, I deem the area to not have been broken – although I do trade with caution in such instances. I would take a short trade here with a risk-reward of 1:2, aiming for a 2% rise on my bank, and a stop loss just a few pips above the high of the move.


Figure 3.

Figure 3 shows that the trade would have been successful. Price would have been close to our stop loss but it should not have hit it, and our target would have been met quite comfortably in the end. That’s it for today – more tomorrow.

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