Trade Example – GBP/USD

Filed under: Learn Forex Trading |

I have a nice, simple forex price action trade example for you today. This time, the setup comes on the GBP/USD forex currency pair, which is the pair for the British pound and the American dollar. This is one of the most liquid and popular pairs to trade on the market.

 

Figure 1.

If you take a look at Figure 1, you will see the daily chart for the GBP/USD pair. In this chart, each of the candlesticks represents one day’s worth of price movements on this pair. There is no really obvious trend with this pair at present. It seems to be chopping around in something of a trading range. At present, the 8-day exponential moving average is crossed above the 21-day exponential moving average; which signals that this pair is slightly bullish. However, this is only a very short-term trend.

 

The candle that we are most interested in here is the large pin bar that happened just a few days ago. This was followed by another, shorter pin bar. We could have therefore entered on a 50% retracement of the first pin bar, going long. Our stop loss would have been placed just a few pips below the low of the first pin bar, with a target set of two times our risk. As you can see, this trade would now have been successful for a very nice 2% rise on our bank.

 

This was a very simple setup, but often, the simplest ones are the best. This kind of pin bar is very obvious and sticks out on the chart like a sore thumb. It is clear that something peculiar happened in the market, as it headed in one direction, and then made a complete u-turn, all in the space of 24-hours. Well, that’s all for this week, and I’ll be back next week with more trade examples.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>