I know its a bit late for anyone to act on, but I thought I’d go over a classic trade that occurred yesterday on the JPYUSD.  As I said, too late for you to capitalise on, but it helps to become familiar with what a good trade looks like, and what to look out for when deciding when to exit the trade.

As in all trades, you want to be trading in the direction of the longer term trend; in this case, we are looking to buy.  The next thing we need is to identify a good entry point.  We use a variety of indicators to help us, but once we get into the high probability areas (high probability of the market direction changing) we need a signal to tells us to enter the trade.  I look for candlestick patterns to give me that signal.  In this example, the candlestick pattern that signaled the entry point was the hammer candle that I’ve highlighted on the chart below.  So now that we’re in the trade; we need to try figure out when to take our money.  Using various resistance points we can identify potential places where the trade may turn against us.  In this chart, the first potential place was the 50% fibonacci.  This line coincided with a previous resistance point, so we could suspect that it may happen again.  Again, we look to the candlestick patterns for help.  In this trade, the candlestick smashed through the resistance point and closed above it.  As it was still climbing strongly, we would shift our attention to the next potential resistance point, on this chart the 61.8% fibonacci line.  As the candle approached this line, the price action retraced forming a bit of a spike high.  However, we should never really act solely on one candlestick pattern, we should usually wait for a confirmation.  The next candle again formed a spike high, so that was the signal that there was a high probability that the trade was about to turn.  These candlestick patterns coincided with overbought stochastic so all the signs were there to close the trade.  If you exited at the point, you would have made a healthy profit of around 60 pips.  If however you ignored the signals and remained in the trade you would have given a whole lot back to the market.