Trade Example – USD/JPY Bullish Pin Bar

Filed under: Learn Forex Trading |

I have another forex trade example for you today on the USD/JPY currency pair, which I have traded on Forex Tester and came from 2008. This is a bullish pin bar with the trend that I made around a profit of 1.5 times the risk. So here it is…

 

Figure 1.

Figure 1.

If you take a look at Figure 1, you will once again see the daily chart for the USD/JPY pair. I have marked on the chart a horizontal level of support/resistance, and I have also highlight a bullish candle, which intersects this level (highlighted in green). This is what we call an area of confluence, when two or more signals tip us off that the market may be heading in a particular direction. The S/R level tells us that the bears would have to be particularly strong to break this level, and the bullish pin bar tells us that these prices have been rejected, and that the bulls have gained control.

 

Figure 2.

Figure 2.

What I did here was to put an order in 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 no target set at all – intending to manage the trade. This order was filled, and price began to move up. A bearish pin bar actually formed, so I moved my stop to breakeven, but this was not hit and the market continued to move up. Then there was a bullish candle with a long upper tail, signalling that the bulls were running out of steam, so I moved my stop to just a few pips below the low of this candle, which was subsequently hit for a profit of around 1.5 times the risk (see Figure 2.). Not a bad reward given that our original stop loss was never in danger of being hit, and we were able to move to breakeven and a risk-free trade fairly quickly. More tomorrow…

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