Trade Example – AUD/CHF

Filed under: Learn Forex Trading |

Hello everybody. I have yet another trade example setup to run through today to continue your forex trading education. This time, we are going to be looking at the AUD/CHF forex currency pair, which you might already know is the pair for the Australian dollar and the Swiss franc.

 

Figure 1.

Take a look at Figure 1. This is the daily chart for the AUD/CHF pair. What this means is that every one of the candlesticks represent one day’s worth of data and price movement. Therefore, each candlestick has a story to tell. It tells us exactly what has happened to the pair throughout a day of trading. The day we are most interested here is the candle highlighted in yellow. But before we get to that, let’s look at the recent trend of this pair.

 

By looking at the chart, we can easily see that the pair is roughly moving down from left to right. The blue 8-day exponential moving average is crossed below the 21-day exponential moving average and they are increasingly separating. There are also many more black bearish candles on the chart than there are white bullish candles. All of this tells us that the pair currently has a lot of bearish momentum, and we, as traders want to be on the side of this bearish momentum so that we have a higher probability of success.

 

A good entry point here would be at the break of the low of the highlighted pin bar. This pin bar came at a good area of support/resistance, it was near the 8-day EMA, and it was in the direction of the trend. We could have put a sell order in at the break of this low with a stop loss placed just above the high of the pin bar, and a target of three times our risk. This would have resulted in a 3% gain on our bank. More tomorrow…

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