The Daily Trade – Day 27

Filed under: Learn Forex Trading |

Trade Number 27 – USD/JPY 1 Hour Chart

I’d like to go through a trade example that I didn’t take today as it was against the long term trend. However, I would like to demonstrate that counter-trend trading can also be profitable if you are skillful enough.

Figure 1.

 

This trade is on the USD/JPY chart. If we begin by looking at the daily chart (see Figure 1.), you can see that price formed a nice bottom, with price bouncing off the 76.281 level several times over the past month or so – with some nice long pin bar rejections. This is a good support level, and one that we could be watching on the intraday charts for the start of any retracements back up.

 

Figure 2.

If you now look at the 1 hour chart (see Figure 2.), you will see that a nice bullish engulfing pattern emerged just at the support zone. This may have been worth a punt as it was a strong support level and a nice price action signal. The only negative of course was that it was against the long term trend. However, as it is on the 1 hour chart, we only need a slight move up to make some good profits.

 

Figure 3.

We could have taken a long trade with a stop loss just below the low of the move, and  a target of two times our risk – which should  be a minimum reward level. If you now look at Figure 3, you will see that this particular trade would have been successful for a 2% rise on our bank. About half of my trades lose, which I am not documenting much here – but with a risk-reward of 1:2, it allows us to come out on top. See you tomorrow!

 

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