The Daily Trade – Day 97

Filed under: Learn Forex Trading |

Trade Number 97 – GBP/CHF 1-Hour Chart

For today’s “Daily Trade” price action trade example, I have a trade on the lesser-popular GBP/CHF forex pair, which is the currency pair for the British pound and the Swiss franc.

 

Figure 1.

If you first take a look at Figure 1, you will see that price had been approaching a horizontal area that had first been tested at resistance, and then, with a change of polarity, had been tested as support. Price has since broken through this support area and retraced back up to it, where it may once again act as resistance.  This is where we should be looking out for any price action signals on the daily, 4-hour, and 1-hour charts, as the significance of the level will tip the odds in our favor.

 

Figure 2.

If you now look at Figure 2, which is the 1-hour chart for the GBP/CHF currency pair, you will see that once price got into our green zone, which I mark on the chart at any areas of significance, a nice bearish engulfing pattern emerged. This tells us that the probability of a market turn has increased. We could take a short trade right away here, but because the engulfing candle is so large, this would make our target a very long way away with a minimum risk-reward of 1:2. Therefore, I set an order to go short on a 50% retracement of the candle. The stop loss was a few pips above the high of the move, with a target of two times our risk.

 

Figure 3.

Figure 3 shows that our trade was successful as price moved steadily downwards before our target was met for a 2% rise on the bank (our risk was 1% of our bank). That’s all for today – and I’ll have another trade example for you tomorrow.

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