Live Trade – USD/JPY

Filed under: Learn Forex Trading |

 

I had a successful trade on the USD/JPY forex currency pair yesterday, which led to a nice 2% rise on my bank. You can see this trade at:

 

http://www.myfxbook.com/members/jjrgaskell/daily-trade/357261

 

Figure 1.

If you take a look at Figure 1, you will see the initial setup. This is the daily chart for the USD/JPY pair. As you can see, this pair had formed a nice bottom, which I have marked in with a green band. The pair had really struggled to close below this level, so when it did, this was a good signal to take a short trade.

 

Figure 2.

Figure 2 shows the 4-hour chart for the same USD/JPY pair. After the bearish candle closed below the green band (which marked the significant area of resistance), I put an order in to go short at a 50% retracement of the bearish candle. A stop loss was placed just a few pips above the high of the bearish candle, and a target of two times our risk was set.

 

Figure 3.

Figure 3 shows how this trade played out. Our order was filled as price did indeed retrace slightly as we predicted. However, we did have to wait for twelve hours or so before the order was filled. After that, price continued to move down, and our target was reached in around two days. This is a good example of trading a breakout of a significant level of support/resistance. Trading with the current momentum is always going to give us an edge in the market as we are swimming with the tide rather than against it. Plus, when a significant level of resistance is broken, that resistance then often become a new support level – so our stop loss also has that added protection. Well, that’s all that I have for you today, and I’ll be back with more forex price action trade example next week.

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