Trade Example – XAG/USD (silver)

Filed under: Learn Forex Trading |

There was a very nice trade setup on the XAG/USD pair yesterday (which is the pair for silver). Unfortunately, my order was not filled and I have since closed the order. However, as I have no other trades open at the moment, I thought I would take the opportunity to run you through this setup, as it was a particularly clean one.

 

Figure 1.

If you take a look at Figure 1, you will see the daily chart for the XAG/USD pair. This is the only chart that we will need to look at for this particular setup, as all of the price action that we need to know about is contained within this chart.

 

What you can see in this chart is that price is visibly moving down from left to right. And as if we need any confirmation of this, the 8-day exponential moving average is also crossed below the 21-day exponential moving average, and there is a good gap between them. This tells us that there is a good amount of bearish momentum in this particular market.

 

I have also market in a very significant area of support/resistance on this chart (marked with a green band). Therefore, when a nice bearish pin bar formed, penetrating this level of support/resistance, and also penetrating the 21-day exponential moving average, this was a perfect price action trade setup. I 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 two times my risk. However, as mentioned, this order was not filled and price has since moved swiftly downwards as expected. Well, that’s all that I have for you today – and I’ll be back tomorrow with yet another forex price action trade example.

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