Trade Example – AUD/CHF

Filed under: Learn Forex Trading |

Our two live trades are still in play (and nicely in profits!), but fortunately as ever, there are still plenty of trade examples to show you of the ones that we missed. Today, we will be looking at the AUD/CHF forex pair, which is one of the minor and lesser-traded pairs. The AUD/CHF symbol represents the exchange rate between the Australian dollar and Swiss franc.

 

Figure 1.

To begin with, take a look at Figure 1 so that we can assess the prevailing trend. As you can see, the chart is generally moving down from left to right and the 8-day exponential moving average is crossed well below the 21-day exponential moving average, which confirms the bearish trend. The two moving averages also seem to be diverging, which is always a good sign. In this kind of scenario, we only really want to be entering the market on the short side, so we are looking out for any bearish price action signals confirming the overall bearish momentum.

 

Figure 2.

Figure 2 shows the 1-hour chart for the same AUD/CHF pair. What you can see here is that a nice pin bar (highlighted) has formed right at the 150-hour exponential moving average, which is often a very significant area that acts as good support/resistance. This pin bar is also in the direction of the trend, so we could have taken a trade here by putting an order in at the break of the low of the 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.

 

As you can see, this trade would have been very successful for a very nice 3% rise on our trading bank. That’s it for today – and I’ll be back with more like this tomorrow.

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