The Daily Trade – Day 76

Filed under: Learn Forex Trading |

Trade Number 76 – EUR/CAD 1-Hour Chart

For today’s “Daily Trade” forex price action trading example, I am going to be looking at a setup on the EUR/CAD chart. This is one of the lesser-traded forex pairs but that doesn’t mean that we can’t find some really great price action setups.

 

Figure 1.

If we begin by looking at the daily chart for the EUR/CAD pair, I can take you through the significant areas of support and resistance. Recently, price has been moving up but there has been some significant resistance at the level that I have marked in with a green band with a thin red line in the middle of it. You will see that price has struggled to break through this area on several occasions, so it is a good area to be looking for any price action setups on the daily, 4-hour, and 1-hour charts. You could set your watch to alert you every hour so that you can check your charts and see if anything interesting is happening at that zone.

 

Figure 2.

Figure 2 shows that our patience would have been rewarded, as a nice bearish engulfing pattern formed right at this level, which tips us off to the fact that the market sentiment might be changing. We could have taken a short trade here with a stop loss just a few pips above the high of the move. A risk-reward of 1:2 would have been sufficient, so if you had risked 1% of your bank then your target would be a 2% gain on your bank.

 

Figure 3.

Figure 3 shows that we would have almost been stopped out before price capitulated downwards and our target would have been met. That’s it for today and I’ll be back tomorrow with yet another forex price action trading example.

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