Trade Example – CAD/JPY

Filed under: Learn Forex Trading |

As I’ve been moving house this week (again!) and have not been able to get any live trades on, I will again take you though yet another forex trade example, this time on the CAD/JPY currency pair; which is the pairing for the Canadian dollar and the Japanese yen.

 

Figure 1.

To begin with, let’s take a look at Figure 1. This is the daily chart for the CAD/JPY pair. What you can see from this chart is that the 8-day exponential moving average is crossed firmly above the 21-day exponential moving average and it has been for some time. The chart is also moving up very nicely from left to right.  All of this tells us that the pair is in a very strong bull trend, and we should only be looking to go long on this pair. Therefore, we could have been looking out for any bullish price action signals at any significant areas of support/resistance.

 

Figure 2.

Figure 2 is the 4-hour chart for the same CAD/JPY pair. What this shows is that the pair had started to resume this bull trend and was looking like it was picking up a lot of bullish momentum. Price then pulled back and stopped at a previous level of support/resistance, before forming a double inside bar setup. This would have been a good place to put a long order in with a stop loss just a few pips below the low of the move and a target of around two and a half times our risk. I would have also put in a trailing stop of around one times our risk, just as a little bit of insurance in case the trade started to move against us.

 

Figure 3.

Figure 3 shows that this trade would have been successful for a 2.5% rise on our bank. That’s it for today – more tomorrow.

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