Trade Example – USD/CHF

Filed under: Learn Forex Trading |

I have a trade example for you today on the USD/CHF pair, and although this is not one that I took myself as I felt the setup was a little messy, it does provide a good example of the power of a pin bar in a trend.

 

Figure 1.

Figure 1.

To begin with, take a look at Figure 1. This is the daily chart for the USD/CHF pair, and it is the only timeframe that we will need to look at for this particular pair. The pin bar in question is highlighted in green. It is very much a bearish pin bar in a strong bearish trend – with the 8-day exponential moving average clearly crossed below the 21-day exponential moving average. This also came at quite a nice area of support/resistance (marked with a horizontal red line).

 

What you could have done here was to put an order in to go short at a 50% retracement of the pin bar, with a stop loss placed just a few pips above the high of the pin bar, and a target set of at least two times the risk. Had you done this, the order would have been filled, and the target of two times the risk would now have been met for a very nice 2% rise on the bank (if you are risking 1% of your bank on each trade like I do). This is yet another good example of how you can tip the odds of probability in your favour. If you look at this pin bar, you will see that it sticks out like a sore thumb on the chart, and it is these kinds of setups that you do not need to look too hard to find that you should be concentrating on. The bottom line is – the really good setups should come to you!

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