GBP/JPY – 50% Pin Bar Retracement With Bullish Trend

Filed under: Learn Forex Trading |

I have just had a lovely trade on Forex Tester on the GBP/JPY pair resulting in a profit of around 6.75 times the risk, and I would like to talk you through this setup right now.

 

Figure 1.

Figure 1.

If you take a look at Figure 1, you will see the setup in question. The key candle is the one highlighted in green. This is a bullish pin bar going with a strong recent trend, which also happens to be at a significant area of support/resistance (marked with a horizontal red line). It was at the close of this pin bar that I put an order in to go long at a 50% retracement of the pin bar, with a stop loss placed just a few pips below the low of the pin bar, and with a target set just below the next support/resistance level, which is the highest point on this chart. However, despite setting a target, I also planned to manage the trade depending on market feedback, and what each candle told us as it was formed.

 

Our order was filled, and price began to move up. I actually moved my stop loss to breakeven very early on this one, as the candle immediately after our order was a little bearish. However, this stop loss was not hit, and price continued to move up. In this kind of situation these days, I like to trail my stop to the lowest low of the last three candles. However, as each candle produced a higher low, none of these stop losses were hit. The target was reached after just four trading days for a massive profit of 6.75 times the risk. This is an excellent result, and one that would fund many trades to come.

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