Trade Example – XAG/USD (Silver)

Filed under: Learn Forex Trading |

Well, I recently discussed a live trade order on the XAG/USD pair (the pair for silver and the United States dollar), and although price has gone off in the expected direction, our order was not filled and as such I have had to close the order. However, let’s take another look at this one and review it, as the support/resistance level was so strong.

 

Figure 1.

Figure 1.

To recap, take a look at Figure 1. This is the daily chart for the XAG/USD pair. As you can see, I had put an order in to go long at a 50% retracement of the bullish engulfing candle, which was right at our area of support/resistance, and this was in fact a very strong area in the market, and is a base that has gone back for months in this particular pair. Although ideally, I would have liked to have gone long at the break of the high of the bullish candle, this would have made the risk-reward scenario quite unattractive, as there was another support/resistance level looming just above here, and we do not want a target to be beyond a support/resistance zone. Therefore, I opted to enter at a 50% retracement of the bullish candle, which unfortunately was not filled. I say unfortunately because price has since shot up with a nice bullish move, and had we been long now, we would be in some nice profits. What we could do now is to wait and see if price moves up to the next support/resistance zone, and then to wait and see if any bearish price action signals form; and if they do, to take a short trade and ride price back down. We will watch this one carefully over the next few days and see how it unfolds.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>