Friday, February 20, 2009

Trade: USD/JPY currency pair

Triple-screen trading system

First screen:  the daily chart

This is the first step in which I will make a strategic decision on the trade, be it long, short or standing aside.  The currency pair broke the 94 level back in December 2008.  It is making a second attempt to rally above that level.  I will be looking for short opportunity if the hourly timeframe gives a short signal.

Second screen:
This is the hourly chart for the USD/JPY currency pair:

There is a beautiful bearish divergence being formed -- the price action makes a higher high but the MACD-H makes a much lower high (compare A with C).  Notice also the long, extended uptrend -- waiting to be reversed.  I waited till the price bar turn blue (red price bar forbids shorting according to the impulse system) before I switching over to the 5-min chart in forexyard:

Third screen:  the entry

The trade moved in my favour so I move my stop to the lower high but was eventually stopped out when the pair rallied.  I will be taking half position off as profit in the next trade to manage my risk better.  I made a good 1 pip profit or $3.08 to be exact.  :)

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