Trade Example – CAD/JPY

Filed under: Learn Forex Trading |

Figure 1.


I have a trade example for you today on the CAD/JPY forex currency pair, which is the pair for the Canadian dollar and the Japanese yen. To begin with, take a look at Figure 1. I have marked in some Fibonacci retracement lines, which often act as good areas of support/resistance. Price had been approaching the 61.8% Fibonacci retracement area, which is an area of some significance. This also happened to be an area that price had previously bounced off with a pin bar, so we should be on the lookout here for any price action signals.


Figure 2.

Figure 2 shows the 4-hour chart for the same CAD/JPY pair. I have highlighted the candle that is of most interest to us. This is the bullish engulfing pattern that is right at a previous area of support on the 4-hour chart. This would have been a good place to take a long trade. For example, you could have set an order to go long at a 50% retracement of the bullish candle, with a tight stop loss just a few pips below the low of the move, and a target of three times our risk. A trailing stop would also have been prudent. As it would be a tight stop, a trailing stop of one and a half times our risk would suffice.


As you can see, this trade would have been successful had we caught it for a nice 3% rise on our bank. These kind of trades come along all of the time and as the forex market runs 24 hours a day, it is not really possible to catch all of the setups. But if we can just take a good percentage of the very best setups, then we should be profitable in the long term. That’s all for today – more tomorrow.

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