Trade Example – EUR/USD

Filed under: Learn Forex Trading |

 

I had a bit of a bad trade yesterday on the EUR/USD forex currency pair, which is the pair for the euro and the United States dollar. I would like to take you through this trade right now, and show you the ins and outs of the trade.

 

Figure 1.

To begin with, take a look at Figure 1. This is the daily chart for the EUR/USD currency pair. What you can see here is that price had been in a downtrend, with the 8-day EMA crossed below the 21-day EMA. However, price did begin to move back up, and the EMAs have begun to cross back over. However, as this retracement was at a 61% Fibonacci retracement area, which also happened to be a good area of support/resistance, I felt that this was good place to be looking out for any bearish price action signals.

 

Figure 2.

If you now look at Figure 2, you will see that a nice pin bar formed right at this level, and this was quickly followed by an inside bar setup. I decided to put an order in to go short at the break of the low of the mother candle of the inside bar, with a stop loss placed just a few pips above the high of the mother candle of the inside bar, and a target of two times my risk. Unfortunately, our order was just about triggered before another bearish pin bar formed and took out our stop loss. As there are now four pin bars formed at this level, I am still bearish, and in fact I’ve just put another order in to go short at a 50% retracement of the pin bar. Hopefully this time, our instincts will prove correct. It seems to be a strong level in the market, and all the price action is currently confirming that this is so.

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