Forex Trade Example – USD/JPY

Filed under: Learn Forex Trading |

As we were not able to trade over the festivities due to the markets being closed, I have of course not been able to post any more trade alerts and I thus do not have any live trade results to show you. Therefore, I will today be looking at one of the trades we missed last week – a buy trade on the USD/JPY forex pair.

 

Figure 1.

If you look at Figure 1, what you will see is the daily chart for the USD/JPY pair (which is the exchange rate for the US dollar and Japanese yen). You will see on the right hand side of the chart that price had been squeezed into a very tight range. However, price had been moving slowly up and had finally broken above the upper end of this range and closed above the resistance area. This is where we should have been on the lookout for any price action signals on the daily and lower timeframe charts, namely the 4-hour and 1-hour charts.

 

Figure 2.

Figure 2 shows that price moved back down to this area and then formed a small bullish engulfing pattern on the 1-hour chart. Although the length of the real body of this candle was not totally convincing, we could have taken a buy trade at a 50% retracement of the candle and got a really good risk-reward scenario of 1:3, which would have made taking the trade well worth it.

 

Figure 3.

Figure 3 shows that our order would have been filled and price did indeed move up and a target of three times our risk would have been met. Shame I didn’t catch this one, but in a twenty-four hour market, we cannot expect to catch them all (unless you have a team of course!). So that’s all I have for you today, and I’ll be back tomorrow with another trade example or a live trade result. Until then, enjoy the cold turkey!

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