Hi forex traders,
I posted this EURJPY Trade shown below and the reasons why I took that trade here: how to trade larger timeframes.
The trade is still running and , moved stop loss to lock in some profits behind lower swing high point.
The forex trading system that describes this is here (its a very powerful system when used correctly): support-turned-resistance-and-resistance-turned-support-trading-system.
So using that trading system above, I have been able to capture the downward move at the right time and as you can see the trade is going really well.
I did not need a moving average or stochastics or CCI to give me this signal. All it took was one glance at the monthly timeframe chart, saw where the price was heading up to and the potential level where it could reverse down from and then waited for a sell signal in the 4hr timeframe.
You can do this in the smaller timeframes as well. For example, you see a resistance level in the 1hr timeframe. You can even switch to a 15min or 5min timeframe to take a short trade based on any bearish reveral candlestick you can see there.
This kinds of trades really give you very small risk with huge reward potential.
As a recap, here’s what I saw on the monthly timeframe…notice the first blue box on the left at around August of 2007? And then I saw price heading up to this level. So not this was a situation where there was a potential for a previous broken support level to act as a resistance level.
Now, this trade below, I initially risked 45 pips for that, now I have 150 pips profit locked in: my risk:reward ratio=1:3.3. But considering the current floating profit of 250pips, that would be:1:5.5 (if I were to close the trade now and take the profit).
I switched to the 4hr timeframe and saw a bearish shooting star candlestick. This was my signal to go short:
Forex Trade Profit Target, I am having a long term view on this trade and I hope to let it run for weeks (if I don’t get stopped out). I’m using the 4hr lower swing highs as my trailing stop. Here’s the reason for my take profit target and where I set it. It can be seen much more clearly on the daily timeframe chart:
If I get stopped out, at least I will walk away with a 150 pips profit. Because this trade is based on the monthly timeframe setup, I think it has the potential to go down for another 4-5 weeks (estimated) to hit the profit target (if my analysis is right). But regardless of that, I’d be locking in profits as it continues to move down. Now, I can switch to the lower timframes to short the rallies that that happen. Definitely there will be opportunities there as well.
TRADE UPDATE:
I got stopped out with 145 pips profit on the eurjpy trade as shown below when price moved up back and hit my trailing stop loss:
I GUESS I GOT OUT TOO SOON ON THAT TRADE……….
This chart shows what happened 8 weeks later after that trade was made.
Hope you learnt something. Please lick those links below to tweet, share and google+ to your network of friends! Thanks
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