The Daily Trade – Day 90

Filed under: Learn Forex Trading |

Trade Number 90 – AUD/JPY 1-Hour Chart

What I have for you today for our regular edition of “The Daily Trade” is a trade example on the lesser popular AUD/JPY forex currency pair. This is another example of a 50% retracement of a pin bar.

 

Figure 1.

Let’s start by taking a look at Figure 1. We should always check our longer-term trends, and we can do this quite easily by looking at the daily chart for the AUD/JPY pair. As you can see, there are a lot of black candles, which tells us straight away that the longer-term trend is unequivocally down. This is confirmed by the fact that the 21-day EMA is below the 126-day EMA.

 

Figure 2.

Next, if you look at Figure 2, you will see the 1-hour chart for the AUD/JPY pair. As you can see, there has been a bounce off a green area, which I draw in on my charts to signify a significant area of support/resistance. Price moved back up but then formed a very well formed pin bar. I have also marked in a blue horizontal line to mark a minor area of support/resistance on the 1-hour chart. This seems like a good place to go short, but there is a problem. The green area is too close for us to comfortably get a risk-reward ratio of 1:2. But there is a way around this. We set our sell at a 50% retracement of the pin bar, and this allows us to get a risk-reward ratio of 1:3!

Figure 3.

 

Figure 3 shows that this trade was successful (and I actually took this trade), and we locked in a profit of three times our risk. My own personal risk was 1%, so I had a nice 3% rise on my bank in just a few hours. That’s it for today – more tomorrow.

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