NZD/JPY – Trade Example

Filed under: Learn Forex Trading |

I have a trade example for you today on the NZD/JPY forex currency pair, which this time is the pair for the New Zealand dollar and the Japanese yen. This is not one of the major pair, but it is a pair that has sufficient liquidity for you to trade as often as you like, and the setups are generally as reliable as any other forex pair.

 

Figure 1.

To begin with, take a look at Figure 1. This shows that the 8-day exponential moving average has recently crossed below the 21-day exponential moving average, signaling that the market sentiment has changed and that it has become bearish. In this scenario, I would only really be on the lookout for any price action signals that confirm this bearish momentum and give us an opportunity to hop on.

 

Figure 2.

Figure 2 shows that an opportunity did indeed present itself. A bearish engulfing pattern emerged (which I have highlighted on the chart in yellow for your convenience) right at the 150-hour exponential moving average, which is so often such a good area of support/resistance and price tends to react to this well-used moving average very well. We could have put an order in here at the break of the low of the bearish candle, with a stop loss placed just a few pips above the high of the move, and a target set of there times our risk. We could have also put a trailing stop on this equal to the same number of pips as our risk, which would have become active once the trade moved in profit by this same number of pips. However, it doesn’t look like this trailing stop would ever have been hit and our target would have been met for a very nice 3% rise on our bank. That’s all I have for you for this week, but I’ll be back next week with more live trades and trade examples. Until then, have a great weekend.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>