The Daily Trade – Day 62

Filed under: Learn Forex Trading |

 

Trade Number 62 – AUD/JPY 1-Hour Chart

For today’s daily trade, I am going to be looking at the lesser-traded AUD/JPY currency pair. I look at all of the currency pairs on my MT4 platform when I am trading, as this gives us more trading opportunities. However, I am careful not to “double-up” on any trades of a similar nature, as often, any of the JPY or CHF pairs for example, might have similar looking charts.

 

Figure 1.

So let’s get to it. Take a look at Figure 1. You will see that a level had formed in the middle of the chart (which I mark as a green “zone”) that had been reacted to twice before with long pin bars. Although I usually look for price to react to a level at least three times to make it a strong area of support/resistance, on this occasion I was happy with it as the pin bars were so big and obviously significant. So this was a good level to look for any price action setups.

 

Figure 2.

Figure 2 show the 1-hour chart for the AUD/JPY pair. You will see that a nice bearish engulfing pattern formed right in our green zone, which was a good opportunity to get in on a short trade and place a stop loss a few pips above the high of this move. Your target here should have been at least two times your risk.

 

Figure 3.

If you now take a look at Figure 3, you will see that a risk-reward of 1:2 would have come off very nicely indeed to the downside, and your bank would have risen by 2%. This is another good example of a price action setup and I’ll be back with something similar to this tomorrow. See you then.

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