Forex Trading Pair: Eur Aud
A forex price action long tail pin bar (highlighted in blue) formed off the series of moving average confluence as shown by the:White, blue, gold, orange lines.
What is so important about this. The stronger the confluence, meaning the stronger the things that are backing up a price action bar.The higher the chance of price heading your way.
Therefore in this scenario, there are a tons of confluence underneath the price action pin bar.
And those are just moving averages.
We have not included price pivots (support & resistance) etc.So we enter right at the close on the pin bar. And our target profit area would be the previous high (marked by the white circle).
Do note that the previous highs formed a strong resistance area which price had problems breaking through it in the past few situations.Here’s what happened next.
Price shot right up to our take profit area in just 1 bar. Price then got rejected by the strong area of resistance as mentioned earlier and headed back down right after.We got our profit.
A Very Important Lesson that we can learn from this very scenario:
Always set your take profit area
Had we not set a take profit area because we expected price to head right up. We would have gotten ourself a lost and not a profit.
Remember this, the market moves up and down 90% of the time. Only in 10%, the market moves in a nice smooth upwards or downwards trend.But thats only 10%!
Had we betted that this scenario would be the 10%, we would have gotten killed on a profitable trade.I hope you have gotten something from this little forex trading scenario.
We teach the full forex price action trading system in our course, its the full package for traders who wants to be consistently profitable in forex trading, to learn more and sign up; Click here – AFM Winning Forex Course
See you on the other side!
Asia Forex Mentor
Ezekiel Chew
Asia #1 Forex Mentor
www.asiaforexmentor.com
Next Intermediate Article: Simple trick on how to determine a class *A* forex price action pin bar
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On this sample, how we know it a strong Resistance? How about the risk:reward ratiol about this?
I have try to do this and just don’t know how to Lets profits run if it a trend or not. You see pivot everywhere on the chart from daily to 1 hours. I have been trading for a year plus. Still fonefuse of all this issue.
Hi Charles, as mentioned, its a strong resistance by the number of confluence backing the price action pin bar. You can see the various moving averages and a price pivot backing it. You know its strong.
If we placed a stoploss a the bottom of the pin, we would have gotten a risk reward of 1:1. If you are a little more aggressive and place the stoploss at 50% of the pin, you would have gotten a 1:5 risk reward. However, 1:1 is safer in this scenario.
Generally, i would recommend you to ALWAYS take profit, the market always moves up and down and may get you stop out before going long again.
Unless, the main trend is a strong uptrend, then we can take partial profits first and then trail our profits on the 2nd half of the trade.