Trade Example – USD/JPY Pin Bar

Filed under: Learn Forex Trading |

 

I have a trade example for you today on the USD/JPY pair (the pair for the US dollar and Japanese yen). So let’s get right to it…

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If you look at Figure 1, you will once again see the daily chart for the USD/JPY pair. This is a setup that goes back some ten years – and it is a trade that I have again taken during my test on Forex Tester (www.forextester.com). What you can immediately see is that the pair is in a very obvious downtrend. The 8-day exponential moving average is crossed well below the 21-day exponential moving average, and the chart is very visibly moving down from left to right. In this kind of bearish trend, we only really want to be taking short trades, and looking out for any bearish price action signals as an entry position.

 

Thus, a very nice bearish pin bar formed in the middle of this chart, which was also at a minor area of support/resistance. It was here that I put an order in to go short at a 50% retracement of the pin bar, with a stop loss placed just a few pips above the high of the pin bar, and no target set at all (intending to once again manage the trade). The order was filled, and price started to move nicely downwards. When a bullish candle finally formed, I moved my stop to just a few pips above the high of this candle, and this was subsequently hit for a profit of around 6.5 times the risk.

 

This is a very good example of one way to enter a trend, and how to ride that trend for as long as possible. Note how the string of black candles after our entry all have lower highs, all until our stop loss is hit. Thus, this is a good way of managing a trade in a bear trend (by moving the stop to above the previous high).

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