Trade Example – EUR/CAD

Filed under: Learn Forex Trading |

I have a slightly different trade example setup for you today. This is one that I would classify as speculative, and is not one that I would be taking unless I was on a real roll and could afford a loss. It comes on the EUR/CAD forex currency pair, which is the pair for the euro and the Canadian dollar.

To begin with, take a look at Figure 1. This is the daily chart for the EUR/CAD pair. What this shows is that the trend is a little unclear, but we can say that it is currently down as the 8-day exponential moving average is crossed below the 21-day exponential moving average, and in the last couple of weeks there have been many more black bear candles than there have been white bull candles.

 

Figure 2 shows the 4-hour chart for the EUR/CAD pair. What you can see here is that price had been moving down with the current bearish momentum, before popping up, first to a 61% Fibonacci retracement area, and then again to a 50% Fibonacci retracement area. Around this 50% retracement area, price formed a very well defined pin bar in the direction of the bearish momentum, which also confirmed the recent top. This might have been a good area to put a short order in at the break of the low of this pin bar, with a stop loss just a few pips above the high of the pin bar and a target of two and a half times our risk.

Figure 3 shows how price plummeted after this, and our target would have been met for a very nice 2.5% rise on our bank. It is not often that price reacts quite as strongly as this, but when it does, we can make some very quick profits. Well, that’s all that I have for you today – and Ill be back with more 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Your email address will not be published.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>