The Daily Trade – Day 31

Filed under: Learn Forex Trading |

Trade Number 31 – USD/JPY 1 Hour Chart

Here is the last trading example of the week from me. It is on the USD/JPY currency pair this time and we will begin as usual by looking at the daily chart for any support and resistance areas (see Figure 1.).

Figure 1.

This chart has been extremely volatile these past few months. First, the earthquake and subsequent tsunami created an earthquake on the chart, with it bouncing up and down, then, the latest economic panic again caused it to be volatile. However, it is in a powerful downtrend but it has got stuck at a low which it has bounced off four times already. So I have been watching this zone for any intraday price action signals – despite the fact that it would be going against the long term trend. Ideally, we want to go with the long term trend, but if a support/resistance zone is particularly strong, it is worth looking at for any minor retracements on the intraday charts.


Figure 2.

If you now look at Figure 2, you will see that a large bullish engulfing pattern formed at this zone after a move down. This took out the last eleven hours of trading in one candle, so it was a very powerful move. However, as the last swing high was just above this level creating a resistance area, I did not take this trade – but I’d like to show you what would have happened if we did.


Figure 3.

If you look at Figure 3, you will see that price catapulted up and we could have had at least three or four times our risk. This was a very powerful bounce off this level, confirming the strength of the zone. Well, that’s it for this week – so I’ll see you again next week for more daily trades.

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