Trade Example – GBP/AUD

Filed under: Learn Forex Trading |

 

I have another trade example for you today, and this time the setup comes on the lesser popular GBP/AUD forex currency pair, which for those of you that are not familiar, is the pair for the Great British pound and the Australian dollar.

 

Figure 1.

To begin with, take a look at Figure 1. This is the daily chart for the GBP/AUD pair. This is the only chart that we will be looking at for this setup, as all the information that we require is located in this chart (on the daily chart, every candlestick represents 24 hours worth of data, and the areas of support/resistance on the daily charts are very reliable as a lot of professional traders use the daily charts).

 

To begin with, we always have to assess the current trend of a pair, and with this pair that job is relatively easy. We can see that the chart is moving steadily up from left to right, and we can also see that the 8-day exponential moving average is crossed above the 21-day exponential moving average. All of this tells us that the pair is in a strong bull trend, so we should only really be looking out for trade setups on the long side.

 

I have highlighted a bullish engulfing pattern, which formed at a value area near to the 21-day exponential moving average. This also happened to be a good area of support/resistance as well, so this would have been a good time to take a long trade at the break of the high of the bullish candle with a stop loss just a few pips below the low of the move and a target of three times our risk. This would have been successful for a 3% rise on our bank.

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