Trade Example – EUR/CHF Pair

Filed under: Learn Forex Trading |

Since our live trade has not yet reached a conclusion, I thought I would show you a forex trade example of one that I missed last night, because I was getting my beauty sleep! The trade in question is on the EUR/CHF forex currency pair, which is not one of the most popular pairs, but it is still one that I monitor.


Figure 1.

To begin with, let’s look at the daily chart (Figure 1) to look at the areas of support and resistance. As you can see, there is an obvious level at the top of the chart, which I have marked in with a green band. Price had been moving back up toward this area, so had we been awake, we could have been on the lookout for any price action signals once price got closer to this “zone”.


Figure 2.

If you now look at Figure 2, which is the 1-hour chart for the EUR/CHF forex pair (which is the cross for the euro and the Swiss franc), you will see that a nice bearish engulfing pattern emerged just before this zone. This would have tipped us off to a possible market turn, and we could have taken a short trade here with a stop loss placed just a few pips above the high of the move, and a target of at least two times our risk. I personally would have probably only gone for this minimum risk-reward scenario of 1:2, as there was another level of support/resistance just below this.


Figure 3.

However, this caution would have proved to be unnecessary as if you look at Figure 3, you will see that price really capitulated downwards after this. This is a great example of how a price action signals at an area of significant support/resistance can tip you off to the start of a powerful market turn. That’s all for today – more tomorrow.

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