Trade Example – GBP/USD

Filed under: Learn Forex Trading |

Although we had a live trade alert yesterday, it was a setup taken off of the daily chart and as such, there may not be a result for it for a number of days. Therefore, I have decided to run you through another trade example, this time on the GBP/USD chart. This is one that we missed because it was during the nighttime in the UK (and I was therefore sleeping!). We can’t catch all the setups in a 24-hour forex market, and we mustn’t beat ourselves up when we do miss one. There will be plenty of more opportunities, as the market does not sleep.

 

Figure 1.

If you look at Figure 1, you will see the daily chart for the GBP/USD forex currency pair. As you can see, the pair is in a very powerful up trend, with the 8-day EMA firmly crossed over the 21-day EMA, and there is a lot of bullish momentum. Therefore, we only really want to be taking trades on the long side.

 

Figure 2.

Figure 2 shows the 1-hour chart for the GBP/USD pair during this uptrend. As you can see, there is an intraday support/resistance level (marked with a thin red line) that price is responding to. First, it provided some resistance, and then after price broke through this level, there was a change of polarity and the level then acted as a good area of support. There was a also a very nice bullish engulfing pattern which formed at this area, and this would have been a good time to take a long trade at a 50% retracement of the bullish candle, with a stop loss just a few pips below the low of the move, and a target of two times our risk.

 

Figure 3.

Figure 3 shows that price resumed the bullish momentum, and our target would have been met for a nice 2% rise on our bank.

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