Trade Example – NZD/JPY

Filed under: Learn Forex Trading |

I’d like to talk you through another forex price action trade setup today. This time, the setup comes on the NZD/JPY forex currency pair, which is the pair for the New Zealand dollar and the Japanese yen. This is again not one of the major pairs that are traded, however there is more than sufficient liquidity to warrant it being on our trading radar.

Figure 1.

To begin with, take a look at Figure 1. This is the daily chart for the NZD/JPY pair. What you can see here is that the pair had been in an uptrend but more recently, the 8-day exponential moving average has crossed below the 21-day exponential moving average and the pair has become bearish. Price on this chart is visibly moving down from left to right, and there are many more black bear candles then there are white bull candles. In this kind of market, we only really want to be trading in the direction of the recent momentum, which in this case is down.

 

Figure 2.

Figure 2 shows the 4-hour chart for the same NZD/JPY pair. I have highlighted a nice inside bar setup at an area that previously held as a support/resistance level. What we could do here is 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 mother candle, and a target of two times our risk. We could also put some added insurance in by setting a trailing stop to one times our risk. As you can see, this trade would have been successful for a very nice 2% rise on our bank. That’s all for today, and I’ll be back as usual tomorrow with more; in the meantime, happy trading.

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