Trade Example – EUR/AUD

Filed under: Learn Forex Trading |

 

I have a forex trade example for you on the EUR/AUD currency pair today, and for those of you that don’t know, this is the lesser popular exchange rate for the euro and the Australian dollar. Although this is not one of the most popular pairs to trade, it does have a lot of liquidity, which is why we keep it on our trading radar.

 

Figure 1.

To begin with, take a look at Figure 1. This is the daily chart for the EUR/AUD pair, and this is the only timeframe that we will be looking at for this trade example. Very often, we have to look at the lower 4-hour and 1-hour timeframes for our price action signals, but for this setup, all the information that we require is located in the daily chart.

 

Figure 2.

In Figure 1, you will see that I have drawn a red horizontal line in on the chart. This marks a significant area of support/resistance. This area provided some very good resistance in late February, and after a change of polarity, it is now acting as good support. So when a nice bullish engulfing pattern formed at this very level (highlighted in yellow), we should be sitting up and taking notice. This would have been a good time to put an order in at a 50% retracement of the bullish candle, with a stop loss just a few pips below the low of the move, and a target of two and a half times our risk.

 

Figure 2 shows that price did indeed pull back and allow our order to get filled, before price started to move up and our target would have been met for a very nice 2.5% rise on our bank. That’s all that I have for you today – and I’ll be back with more like this tomorrow.

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