Trade Example – EUR/NZD

Filed under: Learn Forex Trading |

 

We have one live trade currently in play, but this may take a while before we reach any logical conclusion. Therefore, I will again take you through a trade example today from one that we missed; and this time the trade setup is on the EUR/NZD pair, which is the pair for the euro and the New Zealand dollar.

 

Figure 1.

To begin with, let’s take a look at Figure 1. This is the daily chart for the EUR/NZD pair. What you can see is that the chart roughly moves up from left to right, telling us that the pair is in a bull trend. This is confirmed by the blue 8-day exponential moving average being crossed above the red 21-day exponential moving average, and there being a good degree of separation between the two. There is also a nice level of support/resistance that price is bouncing off. This is thus a good area to be looking out for any price action signals to go long.

 

Figure 2.

Figure 2 shows the 1-hour chart for the EUR/NZD pairing. What this shows is that price formed a bullish engulfing pattern right at the 150-hour exponential moving average, which is a very significant area. This added to the confluence we saw on the daily chart made this a very high probably setup. We could have gone long at the close of the engulfing candle, with a stop loss placed just a few pips below the low of this candle and a target of two and a half times our risk. Had we done this, the trade would have been successful for a nice 2.5% rise on our bank. Price often bounces off the 150-hour exponential moving average, so we have to always be on the lookout for any price action signals at these areas that are in line with the dominant trend. More tomorrow…

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