Trade Example – AUD/CHF

Filed under: Learn Forex Trading |

I have a trade example for you today on the AUD/CHF forex currency pair, and for those of you who are still not familiar with these pairings, this is the exchange rate for the Australian dollar and the Swiss franc. This is again one of those pairs that are not as popular to trade, but they still have a lot of good setups so it is worth putting it on your trading map.

Figure 1.

Take a look at Figure 1. This is the only chart that we will be looking at during this example, as all of the information that we require is located in this chart. This is the daily chart for the AUD/CHF pair, which means that each candlestick represents 24-hours worth of data. The daily timeframe is the timeframe that the majority of professional traders look at, so this is why the daily timeframe has the most reliable levels of support and resistance.

 

If you look carefully at Figure 1, you will see that there is a very nice level of support/resistance on the chart, which I have marked in with a thin red horizontal line. This first held as strong resistance in late February, before finally breaking through. After a change of polarity, this area then held as a strong area of support, before price continued to move down. Price then retraced and moved back up to this level again, before forming a bearish engulfing pattern (highlighted in yellow). This would have been a good time to put an order in at a 50% retracement of this bearish engulfing bar, with a stop loss just a few pips above the high of the move and a target of two and a half times our risk. As you can see, this trade would have been successful for a 2.5% rise on our bank. More tomorrow…

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