Trade Example – GBP/JPY

Filed under: Learn Forex Trading |

I have a trade example for you today on the GBP/JPY forex currency pair, which for those of you that don’t know is the pair for the British pound and the Japanese yen. This is a pair that I’m currently giving a thorough test via forex testing software Forex Tester  (www.forextester.com).

 

Figure 1.

Figure 1.

To begin with, take a look at Figure 1, which is the daily chart for the GBP/JPY pair. At the bottom of the chart, you will see a horizontal red line. This is a significant level of support/resistance, and we are looking for price to react at this level to give us an indication of which way the market is likely to go. So, when a very bullish candle closed well above this level – I took it as a very bullish signal, and put an order in to go long just a few pips above the high of the bullish candle, with a stop loss placed just a few pips below the low of the bullish candle.

 

With regards to a target, I had a vague target in mind at the top of this chart, where there is another horizontal red line marking another significant area of support/resistance on this pair (although you cannot see why on this screenshot, and you have to scroll back in time to see the significance of this).

 

The order was filled, and I managed the trade by moving my stop loss up to the low of the last three candles every time a candle was completed. This kept me in the trade all the way up this bull trend, and when price reached the next support/resistance area, a bit of an upper shadow formed, despite it being a bullish candle, and I took profits that equalled almost three times the risk.

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Your email address will not be published.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>