Trade Example – XAG/USD (Silver)

Filed under: Learn Forex Trading |

I currently have my eye on a trade setup on the XAG/USD forex currency pair, which for those of you that are not sure is the pair that represents the exchange rate between silver and the United States dollar.

 

Figure 1.

To begin with, take a look at Figure 1. This is the daily chart for the XAG/USD pair. What you can see here is that the pair is once again in a very strong bull trend, with the 8-day exponential moving average crossed well above the 21-day exponential moving average. This shows that the pair still has a lot of bullish momentum, and as such, we only really want to be trading in the direction of this bullish momentum. I have also marked in an area of support/resistance on the chart (marked with a horizontal green band) and price had once again been moving down towards this level, which is a good area to look out for any bullish price action signals.

 

Figure 2.

If you now look at Figure 2, you will see that a very large pin bar formed at the level in question. This might have been a good place to put an order in to go long at a 50% retracement of the pin bar, with a stop loss placed just a few pips below the low of the move, and a target set of two times our risk. As it is, this order would have been filled, but we have yet to find out if it would have been successful. I did not put this particular order in as the spread is quite wide at 50 pips on this pair and I felt that price would have to go a little to close to the stop loss to get the order filled. However, I may have been a little too careful on this occasion, as the order would have been filled quite nicely and the pair has since moved up a little.

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