Live Trading Example – Forex Support Breakout and Hanging Man Candle

In this live Forex trading example i will show you the way I traded a bearish impulse that came after a Forex support breakout. The example takes place on the H1 chart of the AUD/USD Forex pair a.k.a Aussie. The trade also involves the successful usage of a Hanging Man candle pattern as a confirmation.

Signals of the Forex Support Breakout Trade

  1. The H4 chart of the AUD/USD shows that the general bullish trend has slowed down.
  2. The H1 chart of the pair shows that the trend slowdown is interrupted in bearish direction.
  3. This creates the idea of an overall bearish attitude on the chart.
  4. The Aussie broke a many times tested Forex support level at 0.76670.
  5. The price created a pullback and turned the 0.76670 into a resistance.
  6. The pair closed a big Hanging Man candle pattern, which confirmed the bearish potential on the chart.

Stop Loss and Target of the Hanging Man Candle Trade

I placed a stop loss order above one f the previous tops on the chart. Notice that I neglected the big upper candle wick which was result of high volatility on high trading volume.

I placed my target at the bottom of the big Hanging Man candle pattern. I assumed that the price is about to create the a sharp decrease as a result of the pressure expressed by the Hanging candle. In this relation I expected that the price will at least cover the size of the Hanging Man candlestick.

Live Trading Example

Notice that I adjusted my Stop Loss order below my entry point when the price created the bearish impulse. This way I locked in 10 pips guaranteed profit. If the Stop gets hit, the trade will still be closed on 10 pips profit. This is an example of an effective Risk Management technique that puts you in a profitable and risk-free trade.

Bottom line, the price did not manage to hit the target on the chart. Instead, it hit the already adjusted Stop Loss order. The trade was closed on 10 pips profit as a result.

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Muhammad Awais

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