On January 11 2022 I posted on social media @AidanFX “ USDJPY SHORT/SELL at 115.35 SL/Stop Loss at 115.68 TP/Take Profit at the 115.02-114.85 area.“
Confluence trading is a combination of two or more trading strategies/techniques that come together and form a high probability buy/sell zone in a certain area in the market. Market patterns (Elliott Waves, Harmonic, Head and Shoulders etc.), price action analysis (Support & Resistance, Supply & Demand Zones, Candlestick analysis etc.) and indicators (RSI, Moving Average, Stochastic etc.) are technical strategies/techniques used when trading a confluence setup. The charts below show a confluence trade setup that signals a trader on which side to take the trade.
SELL Trade Setup
1. RSI Indicator Bearish Trend Reversal Divergence (Pink)
2. Price respects the Dynamic Support 200 MA (Blue)
3. Price respects Support/Resistance Level (Black)
4. Stochastic indicator in overbought levels
5. RSI SELL trigger below the 50 level
6. Added bearish confirmation will be if price breaks below trend line (Purple)
USDJPY 1 Hour Chart January 11 2022
Entered the SELL trade at 115.35 with Stop Loss at 115.68 and Targets at the 1:1 – 1:1.5 RR minimum area. USDJPY moves lower, blows past the minimum target area and on January 12 2022 price hits 1:2.5 RR target at 114.53 from 115.35 for +82 pips (+2.5% gain risking 1% on every trade)
USDJPY 1 Hour Chart January 12 2022
A trader should always have multiple strategies all lined up before entering a trade. Never trade off one simple strategy. When multiple strategies all line up it allows a trader to see a clearer trade setup. If you followed me on social media you too could have caught the USDJPY move lower. We at EWF never say we are always right. No market service provider can forecast markets with 100% accuracy. Only thing we at EWF 100%, is that we are RIGHT more than we are WRONG.
Of course, like any strategy/technique, there will be times when the strategy/technique fails so proper money/risk management should always be used on every trade. Hope you enjoyed this article and follow me on social media for updates and questions> @AidanFX
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