Trade Number 50 – ANALYSIS and RESULT

Filed under: Live Trades |

Trade number fifty turned out to be another loser. It seems that we have to accept that January is to be a losing month now, and just try to exercise some damage limitation control. However, regardless of the outcome of the trade, I would like to talk you through my reasons for taking the setup and discuss any shortcomings.

 

Figure 1.

To begin with, take a look at Figure 1, which is the daily chart for the USD/JPY pair. You will see that there has been some significant volatility here, and there has been on this pair for some time. Price had moved swiftly up and then just as quickly had retraced back to a significant area of support/resistance. This is an area to be looking out for any price action setups on the intraday charts, just in case anything well defined and obvious emerges at that level.

 

Figure 2.

Figure 2 shows that a very obvious bullish engulfing pattern emerged right on the zone that we had marked in. Due to the volatility of the pair, I didn’t really want to get in on any trade, but since the engulfing pattern was so obvious and right on the zone that we had marked, I felt that I had to take the trade. I set an order to go long on the break of the high of the bullish candle, with a stop loss just a few pips below the low of the move and a target of two times my risk.

 

Figure 3.

Figure 3 shows that my instincts were right and we should not have been trading on this pair (and that is something for me to note in the future). Price consolidated and moved sideways for a while before moving further downwards. In fact, our order was only just filled by a few pips, so we can consider this to be slightly unlucky. Here are the official results.

 

Trade 50 = -107.70 GBP

 

Bank = 9,915.70 GBP (-0.85%)

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