AUD/USD Short Setup - Order Block Entry
Today I am trading a possible Order block setup on AUD/USD in the 4-Hour Chart.
Looking left, we can see that this major support level has been broken. This support level has been held since July and only was broken yesterday. We saw the price close below this level clearly showing a break in this level.
I looked for the most recent bullish candle before the bearish impulse sending the price below this support level. I highlighted this candle from bottom wick to top wick and extended it right. This yellow zone is called the Order block zone.
I am now waiting for the price to retrace back into this yellow OB zone before opening up my short position targeting the previous price structure around the 0.684 price level.
Depending on where we place our entry will impact our possible risk to reward. I always like to use the middle area of the Order block zone as a point of entry. My stop is placed a few pips above the most recent wick to give myself some room should the price decide to liquidate some positions.
I then like to take targets at a one to two risk to reward. If we hit the one to two RR then I will scale out and let the rest of the position run.
These Order blocks can be fantastic setups and can present very profitable positions, but we have to make sure we trade them carefully. I suggest doing a lot of backtesting before trading these live. There are many ways to trade them and I think the best way to approach them is for you to determine what works best for you. This means, going back in the charts and demo-trade them across time. Then forward test them on a demo account. Decide how you like to choose your entries, targets, and stops. Once you come up with a strategy that works for you, then trade a sample size of around 20 to 25 positions and see if it is profitable for you.
There's no rush. Trade carefully and slowly. Trade mindfully.
See you on the next one.
The Vortex Trader
Looking left, we can see that this major support level has been broken. This support level has been held since July and only was broken yesterday. We saw the price close below this level clearly showing a break in this level.
I looked for the most recent bullish candle before the bearish impulse sending the price below this support level. I highlighted this candle from bottom wick to top wick and extended it right. This yellow zone is called the Order block zone.
I am now waiting for the price to retrace back into this yellow OB zone before opening up my short position targeting the previous price structure around the 0.684 price level.
Depending on where we place our entry will impact our possible risk to reward. I always like to use the middle area of the Order block zone as a point of entry. My stop is placed a few pips above the most recent wick to give myself some room should the price decide to liquidate some positions.
I then like to take targets at a one to two risk to reward. If we hit the one to two RR then I will scale out and let the rest of the position run.
These Order blocks can be fantastic setups and can present very profitable positions, but we have to make sure we trade them carefully. I suggest doing a lot of backtesting before trading these live. There are many ways to trade them and I think the best way to approach them is for you to determine what works best for you. This means, going back in the charts and demo-trade them across time. Then forward test them on a demo account. Decide how you like to choose your entries, targets, and stops. Once you come up with a strategy that works for you, then trade a sample size of around 20 to 25 positions and see if it is profitable for you.
There's no rush. Trade carefully and slowly. Trade mindfully.
See you on the next one.
The Vortex Trader
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