Trade Example – EUR/GBP

Filed under: Learn Forex Trading |

There is not a lot setting up at the beginning of the new trading week in the forex markets, but there is a good example of a pin bar setup in a bearish trend on the EUR/GBP pair (which is the pair for the euro and the British pound). So without further ado, let’s take a look at Figure 1.

 

Figure 1.

Figure 1.

Figure 1 is the daily chart for the EUR/GBP pair, and is the only timeframe that we will be looking at for this particular setup. What you can see is that the 8-day exponential moving average is crossed below the 21-day exponential moving average, and the market is very bearish with a number of long, black candlesticks having formed recently. So, when a very well defined bearish pin bar formed on Friday, it was a good indication that this bearish momentum is set to continue.

 

What you could have done at the start of today’s session was to put an order in at a 50% retracement of the bearish pin bar, with a stop loss placed just a few pips above the high of the pin bar, and with a target set of at least two times the risk. Another way of playing this could have been to go short at the break of the low of the bearish pin bar, but this would have been a little more speculative as there is a minor area of support/resistance coming into play just a little after this level. Personally, I did not take this trade, as it is not a pair that I normally trade – but I know that many people do. It will be an interesting one to watch over the coming days, as it does seem that the bearish momentum is not going to stop any time soon.

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