Trade Example – EUR/JPY

Filed under: Learn Forex Trading |

I have a nice simple price action trade example for you today on the EUR/JPY forex currency pair; which for those of you that don’t know is the pair for the euro and the Japanese yen.

 

Figure 1.

To begin with, take a good look at Figure 1. This is the daily chart for the EUR/JPY currency pair, and it is the only chart that we will need to look at for today’s trade example. All of the information that we require is displayed in this raw, price action chart. These are no clever technical indicators here – just a clean candlestick chart.

 

As always, we start by assessing the trend so that we can trade with this trend, rather than against it. In this case, this assessment is fairly easy. The chart visibly moves down very nicely from left to right, and the 8-day EMA is crossed firmly below the 21-day EMA, and it has been for some time. Moreover, the 8-day EMA and the 21-day EMA are actually getting wider apart, which is always a good sign of a powerful trend with momentum. In this kind of market, we should only really be looking to take short trades so that we are on the right side of this momentum.

 

I have marked in a horizontal line to mark a good area of support/resistance. I have also highlighted a couple of candles which are forming an inside bar. Inside bars tell us that the market is consolidating and taking a breather. This would have been a good time to put an order in at the low of the mother candle of the inside bar, with a stop loss just a few pips above the high of the mother candle of the inside bar, with a target of two times our risk. As you can see, this would have been successful for a 2% rise on our bank. Unfortunately, I missed this one. That’s it for today – 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Your email address will not be published.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>