Hello Traders,
Yesterday, I mentioned a few forex trading setups to watch out this coming week. If you have been keeping an eye out on these setups, then you would notice that NZDUSD trade setup happened today and it was one of the best short trade setups because of how the price moved and responded to that downward trendline.
HOW I TOOK THE NZDUSD TRADE
- My entry was in the 5 minute timeframe when price hit the major downward trendline
- I saw a bearish reversal candlestick pattern-a spinning top. See chart below….this was enough signal for me to go short.
- my initial risk on this trade was 30 pips.
THIS IS HOW THE NZDUSD TRADE IS LOOKING LIKE IN THE 1HR TIMEFRAME
Viewing from the 1hr timeframe gives much more clarity on the trade I guess.
- As you can see on the chart below, there’s the major trendline
- price went up and hit it first (that’s where I sold) and bounced back down .
- and then it went back up to do a retest but it failed to move above the trendline. This resulted in the price falling down. This retest was also a very good opportunity to go short if you have been watching this setup as you can see clearly a shooting star bearish candlestick on the 1hr timeframe. (see chart below to see what I am talking about).
- right now, as I’m writing this post, price is about 100 pips down from where I sold.
HOW I AM GOING TO MANAGE THIS TRADE
- I’ve locked in 10pips at the moment but I really don’t want to move it until I see a definite peak form and then move my trailing stop and place it just above the peak and continue to repeat this process if price moves down.
- the issue here is that price has just dropped quickly and has not formed any peaks at all in the 1hr timeframe to allow me to use properly my trailing stop.
- which means I will have to wait and in the process may see some of the profits being eaten off if price moves back up as a temporary rally.
- You can also see that the take profit target is on the support level below. If price moved favourably, it may take 2-3 days to reach it…fingers crossed.
TRADE UPDATE 13th JAN 2015
Moved stop loss to a lower peak to lock in some more profits.
2nd TRADE UPDATE 14th JAN 2015
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Thanks
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