If only trading forex was as easy as just claiming pips from USD/JPY. Though, sometimes it´s pretty straightforward.
Today was one of those times; USD/JPY formed a bearish chart setup on the hourly timeframe and we just couldn’t say no to that opportunity.
What was the chart setup that made us pull the trigger?
Taking the hourly forex chart into consideration, the trend is down and it is pretty strong. There is no point risking your money going against it unless you are really experienced and the price is sitting on a big support level. Only then, can you try a small long on the first attempt at support.
We don’t have that problem since we´re short. USD/JPY was retracing upward this morning, but the bigger trend was down. We had to wait until the retrace was over before opening a sell forex signal here.
When is a retrace over, you might ask. Well, it is over when you reach a moving average, when the stochastic indicator is overbought and when the price forms one or more reversing candlesticks, such as dojis and reversing hammers, as our candlestick formation strategy suggests.
This is how a reversal pattern looks like
As you can see from the USD/JPY hourly chart, all three indicators appeared at the same time, forming a bearish pattern for this forex pair. We didn’t hesitate and took the trade.
It didn´t take long for the price to reverse back down. We´re close to hitting TP now, so it was a fairly easy trade. Although, it isn’t over till we hit TP or close the trade manually.