Trade Example – AUD/NZD

Filed under: Learn Forex Trading |

I have a forex price action trade example for you today on the AUD/NZD currency pair, which is the pair for the Australian dollar and the New Zealand dollar. This is certainly not one of the most commonly traded pairs, but it is nevertheless a pair that still has good liquidity.

Figure 1.

To begin with, take a look at Figure 1. This is the daily chart for the AUD/NZD pair and we shall use this timeframe to assess the current trend. What you can see on the chart is that the pair was in a powerful downtrend, but just recently that market sentiment has changed. The 8-day exponential moving average has just crossed above the 21-day exponential moving average, and since April, the chart is visibly moving up from left to right. When a new trend starts to emerge like this on the bullish side, it is best only to look for price action signals that confirm this bullish trend.

Figure 2.

Figure 2 shows the 1-hour chart for the same AUD/NZD currency pairing. A nice bullish engulfing pattern emerged right at the 150-hour exponential moving average, which is often a very significant area on the 1-hour chart. This confirmed our bullish trend, and this would have been a good time to go long at the break of the high of the bullish engulfing candle, with a stop loss placed just a few pips below the low of the move and a target of three times our risk. As you can see, this trade would have been successful for a very nice 3% rise on our bank. However, if we had a trailing stop to one times our risk, then we would have got stopped out at breakeven. Well, that’s all that I have for you today, but I will be back once again with another price action trade example tomorrow.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>