Trade Example – EUR/GBP

Filed under: Learn Forex Trading |

 

The order from yesterday’s live trade did not get filled, so I will again take you through a trade example today. Today, the setup comes on the EUR/GBP forex currency pair, which for those of you who are not familiar with the currency pairs, is the pair for the euro and the Great British pound.

Take a look at Figure 1. This is the daily chart for the EUR/GBP pair. Sometimes we look at the daily chart just to assess the current trend and then look at the lower 4-hour and 1-hour timeframes to get our entry. However, sometimes we exclusively look at the daily chart both for trend analysis and entry, and this is the case with this setup.

 

What this chart shows is that the trend became bearish in early March, with the 8-day exponential moving average crossing below the 21-day exponential moving average and staying below it. The chart has also visibly moved down from left to right since late February, which confirms this bearish trend. So in this kind of market, we only really want to be looking to go short and hop onto this bearish momentum.

 

The candle we are most interested in on this chart is the one that I have highlighted in yellow. This was a pin bar rejecting a significant area of support/resistance in the direction of the bear trend. This would have been a good time to put an order in for a short trade at a 50% retracement of the pin bar, with a stop loss just a few pips above the high of the move and a target of three times our risk. As you can see, this order would have been filled for a very nice 3% rise on our bank. That’s all for today, and hopefully our live trade today will be filled so we can discuss that tomorrow.

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