The Daily Trade – Day 84

Filed under: Learn Forex Trading |

Trade Number 84 – EUR/CAD 1-Hour Chart

For our last trading example of this week, I’m going to be looking at the EUR/CAD forex currency pair. This is again, one of the lesser popular forex pairs – but the liquidity is such that there are no problems at all in trading it.

 

Figure 1.

Let’s look at Figure 1 to begin with, which is the daily chart for the EUR/CAD pair. As always, I have my significant areas of support and resistance drawn in on the chart with green horizontal lines, or “zones”, as I like to call them. The EUR/CAD had been consolidating in a horizontal trading range, and price had been once again approaching the bottom end of this trading range. This is the area where we should be looking out for price action setups on the daily and intraday charts.

 

Figure 2.

If you now look at Figure 2, you will see that a nice bullish engulfing pattern formed when price entered our green zone. This is our cue to go long and place a stop loss just a few pips below the low of the move to allow for the spread. A risk-reward of at least 1:2 should be taken, so if we risk 1% of our bank then we are aiming for a target of 2%.

 

Figure 3.

Figure 3 shows what would have happened had we taken the trade. Price moved up quite nicely and a target of 2% of our bank would have been locked in. Whether price continues to move up more remains to be seen and perhaps we could have got 3% or even 4% rises on our bank. However, we must stick to our original plan – and if that was a 2% target then we should stick to that, lock in the profit, and move on. Greed has been the downfall of many a trader. That’s all for this week. Have a great weekend.

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