Trade Example – AUD/NZD

Filed under: Learn Forex Trading |

 

I have a trade example for you today on the AUD/NZD forex currency pair, which is the pair for the Australian dollar and the New Zealand dollar.

 

Figure 1.

To begin with, please take a look at Figure 1. This is the daily chart for the AUD/NZD pair, and it is the only chart that we will need to look at for this particular forex price action setup.

 

As you can see, this market began to move up at the beginning of April, with the 8-day EMA crossing above the 21-day EMA. However, this all changed at the end of May when this bullish move began to run out of steam and the 8-day EMA crossed below the 21-day EMA, signalling that the market has gone from bullish to bearish. While the market is bearish like this, we should only really be looking to take any short trades, so we are looking for price action signals that confirm this bearish momentum.

 

I have also marked in a horizontal level of support/resistance on the chart. This first acted as resistance on the way up, and then again on the way down before breaking through the level. I have highlighted the candle that we are most interested in. This is a pin bar that penetrated this area of support/resistance, and rejected it. If we had put an order in here at a 50% retracement of the pin bar, with a stop loss just a few pips above the high of the pin bar, and target of two times our risk; this trade would have been successful for a very nice 2% rise on our bank. These are trades that put probability on our side, so in the long run, we should come out on top. Well, that’s it for today – more tomorrow.

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