Trade Example – AUD/CHF

Filed under: Learn Forex Trading |


No live trades so far today, so I’m afraid it’s going to have to be another trade example for you – this time on the AUD/CHF forex currency pair, which is the pair for the Australian dollar and the Swiss franc.


Figure 1.

Let’s being by looking at Figure 1. What you will see here is that the blue 8-day exponential moving average is crossed below the red 21-day exponential moving average, signaling that we are in a bear trend. You can also see that the chart is roughly moving down from left to right. What we can also see via a visual inspection is that very recently, there has been some very powerful bearish momentum, with six or seven bearish candles in a row.


Figure 2 shows the 4-hour chart for the AUD/CHF pair. I have highlighted a pin bar in the middle of the chart that is in the direction of this bearish trend. You can also see that price on the four-hour candles hit a kind of base just before this pin bar, before breaking through. In a change of polarity, this pin bar is then piecing through this previous area of resistance, which is now new support. What we could have done here is set an order at a 50% retracement of that pin bar; with a stop loss placed just a few pips above the high of the pin bar, and a target of three times our risk. We could also have set a trailing stop of one times our risk to lock in any profits if the trade moved in our favor. As you can see, this trade would have been successful for a 3% rise on our bank, or perhaps a little less had we set the trailing stop. Well, that’s it for this week, more next week – until then, have a GREAT weekend!

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