Trade Example – EUR/USD

Filed under: Learn Forex Trading |

I have a trade example for you on the EUR/USD forex currency pair today, which is the pair for the euro and the United States dollar.

 

If you look at Figure 1, you will see the daily chart for the EUR/USD currency pair. What you can see here is that at the bottom of the chart, the 8-day exponential moving average crossed above the 21-day exponential moving average, and these moving averages have continued to diverge and move even further apart.

 

Figure 1.

I have marked in a couple of levels (with horizontal green bands) where price got temporarily stuck and formed areas of support/resistance. At the second of these levels, price broke through and shortly after, a bullish pin bar formed. We did put an order in here to go long at a 50% retracement of the pin bar. The order was desperately close to being filled, and was just a few pips away from our price. However, the order was left unfilled, and price has since moved up.

 

Another option could have been to put an order in to go long at the break of the high of the bullish candle, with a stop loss placed just a few pips below the low of the bullish candle, and a target of two times our risk. I didn’t want to do this and instead opted for a 50% retracement entry because that would have left our target quite far away. But as it turned out, we didn’t need to be so cautious, and an entry above the high of the bullish pin bar would have been sufficient for a 2% gain on our bank. However, price came so close to our buy order that we can consider ourselves to have been very unlucky on this trade. That’s it for today, and I’ll be back with more tomorrow…

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