Trade Example – EUR/JPY

Filed under: Learn Forex Trading |

There was a nice forex price action trade setup on the EUR/JPY currency pair recently, and I would like to talk you through that setup right now.

To begin with, take a look at Figure 1. This is the daily chart for the EUR/JPY pair. What you can see here is that price has been moving down quite dramatically, with the 8-day EMA crossed firmly below the 21-day EMA, and it has been for quite some time. In this kind of scenario, we are better advised in only taking trades on the short side, so that we are going with this market momentum. I have also marked in a very significant area of support/resistance on the chart. The low made at the end of May has now become a new support zone, so we need to be watching this zone in particular for any price action setups.

Figure 2 shows the 4-hour chart for the same EUR/JPY pair. What you can see here is that a very pronounced pin bar formed right at our area of support/resistance. This would have been a good place to set an order to go short at the break of the low of the pin bar, with a stop loss placed just a few pips above the high of the move, and a target of two times or risk. As you can see, this trade would have been successful for a very nice and relatively quick 2% rise on our trading capital. This kind of pin bar stands out like a sore thumb, jumping out and almost screaming at you. They really are hard to miss. Well, that’s all that I have for you today, and I’ll be back with more price action trade examples for you tomorrow. Until then, happy trading!

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