Trade Example – EUR/JPY

Filed under: Learn Forex Trading |

There was a trade opportunity that we missed today with regards to our live trades (as I was mowing the grass!), but I would like to run you through this setup right now. We should not be too depressed when we miss good trade setups as we cannot catch them all (unless we look at our screens 24 hours a day!) and we know there will be many more opportunities to come.

 

The missed opportunities in question came 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 look at Figure 1. This is the daily chart for the EUR/JPY pair and as you can see, we are currently in a sideways trading range with no notable trend to speak of. However, recent momentum has been down, so if we trade off of the intraday charts, we would be better to go with this momentum.

 

Figure 2.

Figure 2 shows the 1-hour chart for the same EUR/JPY pair. What we can see here is that there is a nice area of support/resistance (marked with a green band) that price had broken through before forming an inside bar. We can see this inside bar more clearly in Figure 3. This would have been a good time to put an order in at the break of the low of the mother candle of the inside bar, with a stop loss just a few pips above the high of the move, and a target of two times our risk.

 

Figure 3.

As you can see, this trade would have been successful for a very nice 2% rise on our bank. This was a very nice setup and one that would not have tied our capital up for very long at all. Maybe next time…

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