Trade Example – AUD/JPY

Filed under: Learn Forex Trading |

I have a very nice trade example for you on the AUD/JPY forex currency pair this morning, and for those of you that don’t know, this is the exchange rate between the Australian dollar and the Japanese yen. This exchange rate will only be of interest to forex traders who like to trade the minor pairs, or… for Australians wishing to take a trip to Japan!

 

Figure 1.

To begin with, let’s take a look at Figure 1. This is the daily chart for the AUD/JPY pairing. What you can see here is that since around mid-March, price has been moving downwards in a bear trend, culminating in the 8-day exponential moving average crossing below the 21-day exponential moving average and confirming this bear trend. In this kind of trend, we should only really be on the lookout for price action signals that are in the direction of this trend so that we can hop on to some of that momentum and make some profits.

 

Figure 2.

Figure 2 shows the 4-hour chart for the same pair. I have a horizontal line drawn in on this chart that marks a good area of support/resistance. This area had first acted as resistance, and then, after a change of polarity, it started to act as support. A nice 4-hour pin bar formed right at this level (highlighted in yellow), which was a good time to put an order in to go short at the break of the low of the pin bar with a stop loss just a few pips above the high of the pin bar and a target of three times our risk.

 

Figure 3.

Figure 3 shows that this trade would have been successful for a very nice 3% rise on our bank. That’s it for today – and I’ll be back tomorrow with more.

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