Trade Example – CAD/JPY

Filed under: Learn Forex Trading |

Although we have a live trade currently in play right now, it has not yet reached a logical conclusion so I will again take you through a trade setup that we missed, this time on the CAD/JPY forex currency pair, which is the pair for the Canadian dollar and the Japanese yen.

 

Figure 1.

If we begin by looking at the daily chart (Figure 1.) for the CAD/JPY pair, we can instantly see that the pair is in a bull trend. The 8-day EMA is crossed firmly above the 21-day EMA, and the chart visibly moves up from left to right. When a pair is in a bull trend like this, we are best only taking long trades on any retracements to a value area so that we can hop onto this trend and ride some of the momentum.

 

Figure 2.

Figure 2 shows the 1-hour chart for the same CAD/JPY pair. What you can see here I that price has moved back down to a great area of confluence. There is a nice intraday area of support that has recently been respected, and there is also the 150-day exponential moving average, which is also often respected. Price has also formed a bullish engulfing pattern, followed by a pin bar at this area. This would have been a good time to set an order to go long at the break of the pin bar, with a stop loss just a few pips below the low of the move, and a target of three times our risk.

 

Figure 3.

Figure 3 shows that the trade would have been very successful in a very short amount of time, for a nice 3% rise on our bank. This is another great example of trading using price action setups at areas of confluence. Well, that’s it for today – and I’ll be back with more tomorrow.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>