The Daily Trade – Day 79

Filed under: Learn Forex Trading |

Trade Number 79 – EUR/AUD 1-Hour Chart

I made a very nice trade yesterday, which came off very nicely indeed, and I would like to take you through that trade right now.

 

Figure 1.

Take a look at Figure 1. You will see that price had been approaching a level of support and resistance on the daily chart for the EUR/AUD forex pair. I should point out that this is not one of the more popular forex currency pairs, so this is why it may be unfamiliar to you. However, the liquidity is still good and the spreads reasonable, so there is no reason not to trade. The only thing to be careful of is not having too many trades with the same currency (i.e. Lots of euro trades or lot of Australian dollar trades.). This could end with similar results and your maximum drawdown could be compromised.

 

This level of support/resistance on the daily chart is not the strongest I have ever seen, but it had been respected on three or four occasions, so it was strong enough to draw in and watch our for any price action signals on the daily, 4-hour, and 1-hour charts.

 

Figure 2.

Figure 2 shows a price action signal, which formed on the 1-hour chart at this level. It was a bearish engulfing pattern. I placed a stop loss just a few pips above the high of the move, and as it was quite a tight stop, I went for a risk-reward of 1:3, so that is three times my risk (My risk was 1% of my bank so my potential reward was 3% of my bank.).

 

Figure 3.

Figure 3 shows how things turned out. My stop loss was so close to being taken out before price really capitulated downwards and my target was met. Well, that’s it for this week – have a really great weekend.

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