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$600 in 2 hours. A Great Trade Setup!

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Hope you had a great summer and got a chance to spend some quality time with friends and family. To kick things off for the upcoming trading season, I thought I’d share a trade setup with you from earlier today.

This morning, we saw wild price action with the Non-farm payroll numbers creating volatility in the market. Once the market had settled down, prices started moving in a more normal manner and we saw this trade setup in EURUSD. This trade was based on the “Double Bottom” trade pattern.

There are a few keys things to remember about this setup:
1. Price went to test yesterday’s lows but could not hold below.
2. Price couldn’t hold below the 1.1100 level, The Big Figure, even during NFP.
3. We saw multiple attempts by price to move below this level but failed.

Double Bottom patter

Trade: After the NFP numbers were released, we saw price whiplash in both directions. The price moved up first then quickly reversed and went down to test the previous day’s lows. The price got rejected at this level and moved right back up to the point of release, filling the inefficient gap. However, the price didn’t have enough momentum to sustain the up move and came back to test the lows again, this time moving slower. Once at the lows, the price failed to go below the low formed during NFP. We saw a pinbar (also known as a “doji”) form at the bottom, showing rejection, followed by a strong bullish engulfing candle that took out the last 3 candles. This is a nice reversal pattern in itself. However, combined with the previous rejection at this price (after NFP), this makes a very strong “Double Bottom” pattern.

I like to have a safer stop, a few pips below the first rejection at 1.088, giving me a 20 pip stop. However, you could place your stop a few pips below the most recent price rejection (the pinbar), which would make it a 13 pip stop. Either way, this was a great trade with a 3 to 1 risk to reward ratio. The overall move was 82 pips, with our entry to exit netting us 60 pips in the trade.

I’ve found these to be highly reliable trades that pay out consistently, especially when we have multiple points of confluence coming together like in this instance.

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