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.
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. :)