Live Forex Trade Video +34 Pips on EUR/USD 4hr Chart

In the video below I enter a bearish EUR/USD reversal trade. The set-up was straight forward, bullish preceding trend followed by indecision on a resistance area. Below the video I explain this trade in detail.

Trading Reversals – Transitions of Power

If you have gone through my free Price Action Strategy you will know exactly how I trade reversals. The main concept behind my strategy is that reversals come in three parts:

1. Preceding trend.
2. Indecision.
3. Reversal trend.

The preceding trend is a strong bullish or bearish trend. When the preceding trend meets a support and resistance area indecision forms. After the indecision the reversal trend forms and I enter a reversal trade. The EUR/USD trade in the video above had this pattern.

eurusd reversal preceding trend

In the image above you can see that EUR/USD bounced from the 1.2950-1.2970 support area and spent all of Monday climbing up. This was the bullish preceding trend.

eurusd reversal indecision

EUR/USD then hit the 1.3040-1.3060 resistance area and stalled. We can see that once the resistance area was hit candles the candles got smaller. This indicates that the Bulls are losing control of the market and that the Bears are fighting for control. A resistance area is also known as a sell area because there are large groupings of sellers at resistance areas. When the Bulls ran in to this resistance area sellers flooded the market and stopped the bullish trend.

eurusd reversal trend

After the indecision the Bulls lost control of the market and the Bears gained control. This is what I mean by ‘transition of power’. At first the Bulls had the power and they pushed price up. However, when the Bulls hit resistance a transition of power occurred and the Bears gained control. Trading reversals is simply about spotting transitions of power and exploiting them.

The entry for this trade was placed just below the two indecision candles at 1.3045. I entered this trade a little late at 1.3039. For more information on how I calculate targets and stops check out my strategy for free section.

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29 thoughts on “Live Forex Trade Video +34 Pips on EUR/USD 4hr Chart
  1.  hey Nick,

    Interesting I took the exact same short trade last night for +30 pips on the 4 hour chart.

  2. Did the same trade for only 20 pips because I was afraid of an early reversal before the 1.3000 level.

  3. If you’re unable to monitor a trade live is it possible to put in a trailing stop to catch some more of that downward movement?

    1. It is definitely possible to use trailing stops on reversal trends but I have never been a fan of trailing stops myself. This reversal trend was messy so most trailing stops would have been hit pretty quickly.

    1. It is easy to take trades like this. Forex as a whole is not easy but these kinds of trades are dead simple.

  4. Hi Nick, I love your video. Just one question, would it be a valid concern of a potential risk of gap-filled, since the market has opened a substantial gap-down that has yet to be filled. Hope to learn from your thoughts. Cheers.

    1. I don’t pay much attention to gaps. I wrote a post about gaps on Monday which I will be posting this week. It explains why gaps are not significant to me.

  5. Nick I have been trading your method for 3 months. So far I have had a 80% success rate! I was just about to quit before I found this site.

    I took this exact trade but entered at 1.3050. I made 43 pips :-)

  6. hi Nick
    very logic how you think & explain, many learn from your experience & so do i, bravo !!!
    however not all trades r winners…do you sometimes record trade that is turning against your setup ? could you someday analyse such trade so we see, no matter a “perfect” setup, things can go wrong & we learn to accept this w/minimal loss
    thank you
     

  7. good lesson Nick but I have a problem. I use FXCM charts (no particular reason except that they don’t demand huge sums to open an acc!)
    On the FXCM4hr chart for EURUSD there was a clear indecision candle on 6 May at 1.2973 following a sell off of 100 pips and then a reversal which I took and made a v nice profit. Your entry point at 1.3038 did not indicate an indecision candle albeit the trade did reverse.

    So we both made a profit but on different moves…c’est la vie!!

    1. It seems so. I wouldn’t worry too much, sometimes your charts will show you moves earlier too.

  8. My chart looks so different that I missed the trade. What broker is it that you are using?

    1. I use to think that GMT are the best but these days I really don’t mind. Price action is price action and it is the same on all charts. Sometimes the NY charts will signal trades an hour earlier sometimes the GMT charts will…. I think it all averages out.

      That being said I have always and will always use GMT charts.