The Daily Trade – Day 87

Filed under: Learn Forex Trading |

Trade Number 87 – EUR/USD 1-Hour Chart

For today’s “Daily Trade” forex price action trade example, I am going to be looking at the EUR/USD currency pair and a trade that set up on the 1-hour chart.

 

Figure 1.

To begin with – let’s look at our significant areas of support and resistance. Figure 1 is the weekly chart for the EUR/USD pair. I am using the weekly chart as we are looking at a period of well over one year, so this is much easier to visualize (the candles on a daily chart get too small to see over a long period such as this). The area of interest is the “zone” at the bottom of the chart marked with a green band. This area has been tested as support and resistance at the turn of the year and price has been approaching this level once again. This is where we should be looking out for any price action setups on our daily and intraday charts.

 

Figure 2.

Figure 2 demonstrates that when price entered this green zone, a nice bullish engulfing pattern emerged. This is our cue to get in on a long trade with a stop loss placed just below the low of the move. Our target should be at least two times our risk. This is because around a half of these trades do fail – so you need to get used to that fact.

 

Figure 3.

Finally, Figure 3 shows the outcome of this trade. Price did react to the zone very well and a target of two times our risk would have been met quite comfortably. Price may well ultimately break through this zone, but we only need a slight reaction to make some profits on the lower level timeframes. Well, that’s all I have for you today – and I’ll be back tomorrow with another forex price action trade example.

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