Trade Example – AUD/JPY

Filed under: Learn Forex Trading |


I have no live trade updates for you so far this morning. We currently have one trade in play on the XAU/USD (gold) pair, and our trailing stop has locked in a profit of around 0.6%; so that is going well. But since we have no results to report, as an alternative I will run through a setup that we missed on the AUD/JPY forex currency pair, which is the pair for the Australian dollar and the Japanese yen.


Figure 1.

To begin with, if you look at Figure 1, you will see that the pair is currently in a very strong bull trend. The 8-day EMA is crossed above the 21-day EMA, and the chart visibly moves up from left to right. On this kind of chart, we should only be looking to go long on any pullbacks and ride that trend just a little bit higher.


Figure 2.

Figure 2 shows the 4-hour chart for the same pair. You will notice that there had been a gap up in the market, which often acts as a good area of support/resistance, so I have marked in a thin horizontal red line to remind me of this. Price then moved back down toward this red line and formed a bullish pin bar. This may have been a good area to go long, with a break of the high of the pin bar. We could have placed a stop loss just a few pips below the low of the move, with a target of at least two and a half times our risk.


Figure 3.

Figure 3 shows that price continued to move up, and our target of two and a half times our risk would have been met for a 2.5% rise on our bank. These kinds of setups are very high probability trades, and if we spot them, we should not hesitate. That’s it for today – more tomorrow.

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