Trade Example – AUD/CAD

Filed under: Learn Forex Trading |

I have a trade example for you today on the AUD/CAD forex currency pair. For those of you that still don’t know, that is the exchange rate between the Australian dollar and the Canadian dollar. To begin with, let’s take a look at Figure 1.

 

Figure 1.

Figure 1 shows the daily chart for the AUD/CAD pair, and this is the timeframe that we will be using to assess the trend. As you can see, the 8-day exponential moving average has recently crossed above the 21-day exponential moving average, and the pair is starting to move up with more white candles than black ones recently. I wouldn’t want to go against this kind of momentum, and as such, I would only really be looking out for any trades in the direction of this bullish momentum.

 

Figure 2.

Figure 2 shows the 1-hour chart for the same AUD/CAD pair. I have highlighted two candles that are of note to us in yellow. They are both bullish engulfing patterns, and they are both near the 150-hour exponential moving average, which is often a good area of support/resistance. Now, we may have been cautious on the first of these setups, but after seeing the first one be successful, we should really be looking to put an order in for the second one.

 

We could have gone long at the close of the second bullish engulfing candle, with a stop loss just a few pips below the low of the move, and a target of two times our risk. As you can see, this trade would have been successful once again for a very nice 2% rise on our bank. Well, that’s it for this week, and I’ll be back next week with more price action trade examples. Until then, have a really GREAT weekend!

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