EURGBP Trade

We recently had a very successful trade in the EURGBP currency pair. In this post I want to walk you through the process from entry to exit and break down some useful points.

Click on chart to enlarge.

We see a series of highs and lows marked, indicating that an uptrend is in place. As swing traders we look for pullbacks in the trend as potential entry points. At this stage, we have no idea or expectation of the outcome, but a pullback has formed in late July, forming a classic "bull flag". This gives us confidence that the trend may continue higher, notice the "tails" on the bottom of the candles and reduced volatility, in other words the trend has paused. An entry order is placed at the 8960 level.

On the right, I've marked the top of the consolidation or bull flag with a yellow line. If the price gets above, or breaks through this line, then there is a reasonable chance that we may see the uptrend resume. We also place a stop loss order below the recent consolidation at around 8860 as we can't predict a successful outcome at this point.
Remember as swing traders, our job is to try and capture a clean move from the entry point to a new high in the trend. We don't want to hang around if the trade shows any weakness and it is perfectly correct to exit ahead of the stop loss, if the market fails to move in the expected direction. None of this is guesswork, we have a written trading plan and all eventualities are planned for, before each and every trade.

Click on chart to enlarge.

Click on chart to enlarge.

Here we see the trade takes off and works exactly as hoped for. Our profit target is reached within a few days and half the position is closed, in accordance with the trading plan. Now our job is to manage the rest of the trade by trailing the stop loss higher until we are finally taken out of the remaining position, about four weeks later. 
Notice the price hugs the top Keltner channel most of the time, which is usually a bullish sign, but after a month, the trend starts to look a little over-extended and we are on guard for any sign of a reversal. We get a large down day, the black candle marked and that proves to be the exit point of this trade. You can clearly see the clean swing that was captured which led to a textbook trade and outcome.
​