9/8 Analysis: Breakout Profit on AUD/JPY
The first rule of our strategy is to identify strong and weak currencies so we can pair them up.
At the London open, the AUD (orange line) is clearly strong and has been trending up. However, we look at the far right to see if there is a steep line which would indicate current momentum in the market. In this case, we don’t have that.
Same on the downside as the JPY (yellow line) has been trending down but it’s been trading flat more recently.
So in this case, instead of entering immediately with a market order, we would place a pending buy 10 pips above the current price. That way, if the trend continues your order would be triggered with momentum (and the trend) on your side. If not, you won’t be triggered at all and have no capital at risk.
- AUD/JPY BUY
This pair did continue up and your order would have been triggered where the first red arrow is. From there, price moved up 34 pips giving you a quick and easy breakout profit.
You can watch the full video analysis here:
[00:00 – 03:19]
[slide] [horizontal 8 charted currency lines on black]
Hello, this is James Edward from CompleteCurrencyTrader.com. Welcome to another Currency Strength Analysis training video.
It’s Tuesday–we weren’t trading yesterday because it was Labor Day and, therefore, bank holiday in the U.S. and I don’t trade whenever there is a bank holiday in either the UK or the U.S. because, generally, the liquidity in the market will be quite thin and the range of movement is generally smaller. So, I wasn’t trading yesterday; hence, no video.
Today is the first trading day of the week and we’re looking at the London Market. [arrow points] This is what the indicator on my Web site looked like at the London Market earlier today. What should stand out very prominently is the yellow Japanese yen which has been, very clearly, trending downward over the last 60 minutes, just prior to the London Market Open. Looking to the strong side, we’re looking to find a strong currency which is going to strengthen. The Australian dollar (this orange line, here) is the strongest currency. It has been trending up over the last hour, but what we have at the moment (right here, now, at the right-hand side of the indicator), both of these currencies that, although they have been trending apart before the Market Open, right now, they’re more or less going flat. So there’s no movement, immediately, and, therefore, you wouldn’t enter a trade with the market instantly at the Open because we don’t have the momentum. (Remember, ideally, we are looking for steep lines over here, on the right-hand side. If we don’t have them, we don’t enter with a market order. We place a pending order and wait for the market to come to us.)
We’d place a pending-by order, 10 pips above the open price on the AUD against the yen and, if this trend does continue, then that price will come to your order. It will trigger it and then you are into the trade automatically.
So let me go over to the AUD / Japanese yen.
[slide] [B&W vertical line chart – AUDJPY.MS]
These are the five-minute price charts [arrow points] This is the Market Open. [arrow points] This is 7 A.M. GMT (8 o’clock London time) when the London Forex Markets open. (You would’ve placed your order 10 pips above this open price, [arrow points] which is right about here where my maze cursor is.) And, from there, you can see the price went up, initially, almost 20 pips. (I don’t think you would’ve quite had your profit target; it depends on precisely when you would’ve gotten in.)
The market would’ve come back just short of your entry–or just short of your profit target–and then pushed back up again and, overall, it went over 34 pips. So you would have, within the first hour, of taking your 20-pip profit target on that trade. And, again, this is a very easy trade to identify at the Open.
[slide] [initial horizontal 8 charted currency lines on black]
[continues] … There should be no doubt in your mind as to the currencies to be trading, as the Japanese yen is the one that stands out all on its own, down here, to weakness. You pair that against the absolutes from this one; you don’t enter immediately, just use that pending order and wait to see if that trend continues and let the market come to you.
And, today, it did, and it would’ve worked out to be a profitable trade.
You can see that our Currency Strength Indicator is an effective tool for picking out the highest probability, lowest risk trade set ups while avoiding market conditions that aren’t favorable. If you keep using this tool every day along with our daily Forex analysis, you will increase your win rate and be on your way to becoming a profitable trader long term.
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