Trade Example – EUR/AUD

Filed under: Learn Forex Trading |

As I’m going to be away until Wednesday this week, there will be no ‘live trades’ I’m afraid, as I won’t have any Internet connection in the hills of the Lake District. Therefore, I have prepared some more trade examples to keep you occupied with until I get back.

 

This first example comes on the EUR/AUD forex currency pair, which is the pair for the euro and the Australian dollar. This is not one of the major pairs, but it still has plenty of liquidity and enough trading opportunities to warrant it being on our radar.

 

Figure 1.

Take a look at Figure 1 to begin with, which is the daily chart for the EUR/AUD pair. What you can instantly see here is that the pair is in a bull trend. The blue 8-day EMA is crossed above the red 21-day EMA and there is some degree of separation between them. The chart also moves up from left to right. All of this tells us that a bull trend is in place and we only really want to be trading in the direction of that bull trend.

 

Figure 2.

Figure 2 is the 1-hour chart for the same EUR/AUD pair. As you can see, there was a nice pin bar that we missed, and this is acting as a good area of support. Then, another price action signal occurred right at this level – this time a bullish engulfing pattern. This would have been a good time and place to go long at the break of the high of the engulfing candle, with a stop loss placed just a few pips below the low of the move, and a target of two and a half time our risk.

 

Figure 3.

Figure 3 shows that this trade would have been successful for a nice 2.5% rise on our bank. However, had we had a trailing stop of 1R, then we would likely have been stopped out at around breakeven or perhaps with a slight profit. More tomorrow…

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