The Daily Trade – Day 58

Filed under: Learn Forex Trading |

 

Trade Number 58 – USD/JPY 1-Hour Chart

 

Figure 1.

You may have a sense of déjà vu if you are reading this. That would be because yesterday, we also had a trade on the USD/JPY 1-hour chart. This trade setup also comes at the same level of support/resistance that we commented on yesterday. Just to recap and go over it again just in case you did not read yesterday’s commentary, there is a very strong level of support/resistance that price has been reacting to on the USD/JPY daily chart (see Figure 1). It is the same level that was rejected during the Japanese earthquake and tsunami in March of this year. Price has once again come down to this level and is getting stuck there and is unable to break through it. We already had one good trade there yesterday, so let’s have a look at what is going on.

 

Figure 2.

If you look at Figure 2, you will see that another bullish engulfing pattern has emerged just as we are entering this “zone” again. This is another good indication that price may be about to react to this very strong level. Another long trade would be a good option here with a stop loss just a few pips below the low of the move. Just to clarify, these bullish engulfing patterns are only relevant after a significant move down and at a strong area of support/resistance, and they should not be traded anywhere – as it is unlikely to have any sort of edge. A risk reward of 1:3 or even 1:4 could have been taken in this trade.

 

Figure 3.

If you now turn your attention to Figure 3, you will see that price did indeed react to this level once again and your bank would have risen by 3% or 4% depending on what risk-reward you had taken. That’s all for today – more tomorrow.

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