The Last Kiss Trade

Filed under: Learn Forex Trading |

 

Today, I would like to talk you through what is called the ‘last kiss’ trade in forex, and I will do this by way of an example currently setting up on the GBP/USD forex currency pair (the pair for the British pound and the United States dollar).

 

Figure 1.

Figure 1.

To begin with, take a look at Figure 1. This is the daily chart for the GBP/USD pair. What you can see here is that the pair had been stuck in something of a trading range for the past few weeks. The upper level of this range (marked with a horizontal green band) has just been broken, and this break is confirmed because the market has been able to close well above this level, which is important.

 

Many traders might go long at the break of this level, but it is often the case that price moves right back into the trading range after such a break. Therefore, a better tactic is to wait until price comes back down to the support/resistance level (the upper level of the aforementioned range), and to wait for a bullish price action signal (in this case) at this level. This is what is known as ‘the last kiss’ trade.

 

Figure 2.

Figure 2.

If you look at Figure 2, you will see that a bullish engulfing pattern has now just formed on the 4-hour chart, and this could indeed represent the last kiss. However, I felt that this signal was a little weak in strength, so I have not taken this on this occasion. However, it does serve as a good example of what the last kiss trade is, and how to implement it. Ideally, I would be looking for a signal on the daily chart, which provides much stronger signals. Therefore, I will be looking with interest at the close of today’s daily candle on this pair.

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