Trade Example – AUD/CAD

Filed under: Learn Forex Trading |

Our two live trades are currently nicely in profits, but have yet to come to fruition. Therefore, I have a nice trade example to show you today while we wait for those, and this time it comes on the AUD/CAD forex currency pair, which for those of you that still don’t know the pairs, is the pair for the Australian dollar and the Canadian dollar.

 

Figure 1.

To begin with, take a look at Figure 1. This is the daily chart for the AUD/CAD pair, and it is the timeframe that we use to assess the trend and momentum of the market. As you can see, the chart moves visibly down from left to right, telling us that the market is bearish. This is confirmed by the fact that the 8-day exponential moving average is crossed below the 21-day exponential moving average, and it has been for some time with the moving averages diverging all the time. I have also drawn in a horizontal line marking a significant area of support/resistance.

 

Figure 2.

Figure 2 shows the 1-hour chart for the same pair. As you can see, price moved up to this line of support/resistance, before forming a bearish engulfing pattern right at this area. This would have been a good time to put a short order in at a 50% retracement of the engulfing candle, with a stop loss just a few pips above the high of the move and a target of three times our risk. As you can see, our order would have been filled and our target would have been met for a very nice 3% rise on our bank. Unfortunately, I missed this one in real time but we can’t catch them all. That’s it for today, and I’ll be back tomorrow with yet more forex trade examples.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>