Trade Example – AUD/JPY

Filed under: Learn Forex Trading |

As there are no live trades setting up so far today, I will again take you through a forex price action trade example, this time on the AUD/JPY currency pair, which is the pair for the Australian dollar and the Japanese yen.


Figure 1.

To begin with, take a good look at Figure 1, which is the daily chart for the AUD/JPY pair. The chart moves up in an obvious fashion from left to right, and the 8-day exponential moving average is crossed firmly above the 21-day exponential moving average, and it has been for some time. All of this tells us, quite clearly, that this pair is in a bullish up trend; so we should only really be taking any trades in the direction of that trend.


Figure 2.

Figure 2 shows the 4-hour chart for the same AUD/JPY pairing. What this chart shows is that price had pulled back from that bull trend before resuming the move up. Price then pulled back again, but not as powerfully as the previous time, and it retraced to a 50% Fibonacci retracement area before forming an inside bar setup. This also happened to be an area where there had been a massive pin bar when price had been moving up. This confluence of signals would have been enough for us to set an order at the break of the mother candle of the inside bar setup, with a stop loss just a few pips below the low of the mother candle, and a target of two and a half times our risk.


Figure 3.

Figure 3 shows that this trade would have been successful for a 2.5% rise on our bank. This is another great example of a forex price action signal at an area of confluence. Well, that’s it for this week and I’ll be back with more next Monday.

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