Trade Example – NZD/USD

Filed under: Live Trades |

We entered a trade on the NZD/USD forex currency pair last week, which we ended up exiting at a breakeven point. However, this could have been much better, and I would like to take you through this trade setup right now.

 

Figure 1.

As you can see in Figure 1, the NZD/USD currency pair (this is the daily chart) had previously been in a bull trend. The 8-day EMA was crossed nicely above the 21-day EMA, and the chart was roughly moving up from left to right. Moreover, a nice area of support/resistance had formed, which I have drawn in with a green horizontal band.

 

Market momentum then started to shift. The 8-day EMA crossed below the 21-day EMA, and our support/resistance level was decisively broken through. It was at this break of the support/resistance level that we put an order in to go short at a 50% retracement of the bearish breakaway candle, with a stop loss just a few pips above the high of the bearish candle, and a target of three times our risk.

 

You are now able to see my live trades again (after some problems) at:

 

http://www.myfxbook.com/members/jjrgaskell/daily-trade/357261

 

As you can see, we exited the trade at roughly breakeven. I went to breakeven when the trade was in profits of around 150 GBP because of the bad drawdown we have suffered lately (the worst one yet!). However, our stop loss was hit and price has since continued to move down, and had we not gone to breakeven, we would now be back into similar kinds of profits and looking good. However, the bullish white candle shook us out, and this one was not to be. Well, that’s it for today, and I’ll be back tomorrow with yet more forex price action trade examples. Until then, have a great day trading.

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