Direct from the desk of Dane Williams.
Back again with another simple trade walkthrough.
Today we're taking a look at the GBP/JPY setup that we went over on the LeoFinance blog as part of my daily market analysis.
If you're new to forex or still searching for a simple support/resistance trading strategy, then follow along and trade some of the setups featured on the blog.
The GBP/JPY Higher Time Frame View
Our trading strategy always starts with a look at the higher time frame charts.
The idea is to make sure we remain on the right side of the overall market direction and don't unnecessarily fight big money momentum.
If price is above higher time frame support, then we're only looking to buy.
If price is below higher time frame resistance, then we're only looking to sell.
No need to make it any more complicated than that.
With that in mind, here's the GBP/JPY higher time frame chart from the original setup that I've linked to above.
GBP/JPY Daily:
You can clearly see on the higher time frame chart, that GBP/JPY has held support and started to bounce.
As per our scenarios, that means we're only looking to buy.
The GBP/JPY Intraday View
The next step of our trading strategy is where we zoom into an intraday chart and look for an entry.
This is done to really refine our entry price and make sure we're getting the maximum risk:reward that we can from the setup.
We could blindly buy support and sell resistance, but without zooming in and getting good entries with tight stops, we'd more than likely lose money overall.
Take a look at how the GBP/JPY intraday chart played out here.
GBP/JPY Hourly:
You can see on the hourly chart, the higher time frame support zone from the chart above.
The support zone has held and as a result, we're now looking for areas of short term resistance to act as support.
You can also see that the first short term zone that we'd look to buy off, was created on May 18 and then retested on Friday.
Ready for us to long with a tight stop just below the zone, first thing on Monday morning.
Price preceded to do nothing through Monday, before ripping faces off on Tuesday and giving us a clean 1:3 risk:reward trade.
If you find value in what I do, reach out to me either in the comments here, or on Twitter. I'm always happy to chat markets!
Best of probabilities to you,
Dane.
FOREX BROKR | Hive Blog
Higher time frame market analysis.