I thought I give you fellow forextraders a summary of a trade I took on the EUR/JPY today. I will explain my trade setup step by step:
1. First of all look for the direction of the longer term trend, the main trend of this pair is still up so my bias will be towards long trades.
2. Draw the up/down trendlines on the 1H timeframe, these lines provide the triggerlevels because I am biased long I will only trade a break of the upper trendline.
3. Switch to a lower timeframe (5m or 15m timeframe) to time our entry.
That said lets apply this all to the chart of the EUR/JPY (5m). In the picture the downtrendline is coloured brown and the uptrendline is orange. We see a break of the uptrendline in the early London session, but I did not trade this break because it was a countertrend break. Later in the afternoon my sound alarm went off as price aproached the downtrendline, a signal for me to go long is when a 5m candle closes above the trendline, my longtrade was triggered at 12,641.7
My stoploss was placed below the last swinglow at 12,626.0, My target is the next pivotlevel R1 at 12,718.0 This gives me a reward/risk ratio of about 5 so the trade is worth a try. In the second picture you see price hit our target late in the afternoon and it went even beyond our target R1.
May the force be with you,
