The Daily Trade – Day 8

Filed under: Learn Forex Trading |

Trade number 8 – GBP/JPY 1 Hour Chart

I made another trade today, this time on the GBP/JPY currency pair off the one hour chart. I’d first noted a support/resistance level on the daily chart (see Figure 1.), which price had been approaching at around 128.326. Price had previously hit this level as resistance at the end of June, and since then, there has been a change of polarity and this is the second time that price has now retested this level as the new support level.

Figure 1.

As price had reached this support/resistance “zone”, I was again looking for any interesting price action movements on the 1 hour and 4 hour charts that might be worth looking at. There were a couple of early pin bars off this level on the one hour chart (see Figure 2.), but nothing decisive enough to take a trade in my opinion. However, once price got deeply into this zone, a nice pin bar emerged which was also a bearish engulfing pattern. The body of the engulfing candle was not very large though, so I remained cautious and waited to see what happened on the next candle. Nothing much happened at all. A little indecisive doji shaped candle formed – showing that the bulls and bears were struggling with each other, and little headway was made by each.

Figure 2.

As this was an inside bar, I decided to put an order in on the low of the mother candle (the bearish engulfing bar), and wait to see if price moved down. I set a nice 1:3 risk reward ratio, with my stop loss a few pips above the high of the move. My plan as usual is to move my stop to breakeven once price reaches two times my risk. By doing this, we make sure that a winning trade does not become a loser. I will update you on how this one goes when a stop or target has been met.

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