Trade Example – AUD/CHF

Filed under: Learn Forex Trading |


I have yet another trade example for you today – this time on the AUD/CHF forex currency pair, which is the pair for the Australian dollar and the Swiss franc.


Figure 1.

To begin with take a look at Figure 1, which is the daily chart for the AUD/CHF pair. This means that every candle represents one day’s worth of data. You can see that the chart is roughly moving down from left to right, which signals that the pair is in a downtrend. To confirm this visual inspection, we can also see that the 8-day exponential moving average is crossed below the 21-day exponential moving average. You can also see that there are many more black candles than white candles, which is also usually an indication that the market is bearish. So what we need to do in a bear market is to only take trades that are going in the direction of that momentum. This gives us a much higher probability of success. You will also see on the daily chart that there is a significant area of support/resistance, marked with a red horizontal line.


Figure 2.

Figure 2 shows the 1-hour chart for the AUD/CHF pair. In a 1-hour chart, every candle represents one-hour’s worth of data. You will also see that I have marked in the same horizontal level that was shown on the daily chart. As you can see, price has reacted at this area and formed a bearish engulfing pattern. This would have been a good place to put an order in at a 50% retracement of the bearish engulfing candle, with a stop loss just a few pips above the high of the move and a target of two times our risk. As you can see, this trade would have been successful for a 2% rise on our bank.

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