Monday, June 8, 2015
Analysis: 103 pip GBP/AUD Trade
This is a perfect example of a proper divergence setup. I usually like to enter when a very prominent candle appears (e.g. large pin-bar or engulfing bar), but even smaller bars can be profitable in the right circumstances. This setup had a triple-divergence (three consecutive lower lows on the chart and three corresponding higher highs on the RSI), and I entered a long position at 1.9655. I had placed the stop just underneath the low of that small bar at 1.9614, about 37 pips. The take-profit order was placed at 1.9759, but it filled at 1.97689, so about 103 pips. A risk:reward ratio of almost 1:3, which is my favorite. Of course the market went much further and I could have made a lot more on this one, but there is no way to know this ahead of time, so I just set my orders and leave it.
