Trade Example – USD/JPY

Filed under: Learn Forex Trading |

I had an order in on the USD/JPY pair yesterday, but it was an order that was not filled and that I subsequently cancelled. However, I would like to talk you through this trade setup right now…

 

Figure 1.

Figure 1.

To begin with, take a good look at Figure 1. This is daily chart for the USD/JPY pair (the exchange rate between the United States dollar and the Japanese yen). As you can see, this pair is very bullish at the moment. The 8-day exponential moving average is crossed well above the 21-day exponential moving average, and this has been going on for some time and shows no signs of abating. Therefore, if we take a trade on this pair, it is much better to be taking a long trade, and as such, we should be on the lookout for any bullish price action signals on any pullbacks to areas of support/resistance.

 

Figure 2.

Figure 2.

Figure 2 shows the 4-hour chart for the same USD/JPY pair. On this chart, I have marked an intraday level of support/resistance (marked with a thin horizontal green band). When price pulled back to this level, a nice bullish pin bar formed, penetrating and rejecting this level, and signalling that the bullish trend may be about to resume.

 

I put an order in here to go long at a 50% retracement of the pin bar, with a stop loss placed just a few pips below the low of the pin bar, and a target set of two and a half times the risk. This target was nicely at the high of the move, and you can see these levels on the chart in Figure 2.

 

However, our order was not filled, and price moved up towards our target – therefore, I had no choice but to cancel this order. However, I feel that it was a good setup, and a good attempt. More tomorrow…

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