On November 28 2023 AUDJPY was showing multiple bearish market patterns that was signalling traders that the pair was going to move lower.
Confluence trading is a combination of two or more trading strategies/techniques that come together and form a high probability buy or sell trade setup 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.
AUDJPY SELL Trade Setup
1. Price respects and reacts lower from the supply zone (Blue zone)
2. Price forms divergence pattern on price and RSI indicator in the supply zone signalling a possible reversal to the downside (Red line)
3. Price formed and broke below the ascending channel pattern signalling bears are taking control.
4. Price formed and broke below the descending triangle pattern triggering the SELL entry.
AUDJPY 5 Minute Chart May November 28 2023
Entered the SELL trade at 98.143 with Stop Loss at 98.313 and Target Minimum at 97.803 (1:2 RR).
AUDJPY 5 Minute Chart November 28 2023
The pair moves lower below previous support zone which this zone becomes a new resistance zone. Price respects this new resistance zone and moves lower to the proposed 1:2 RR target and even lower to the 1:2.5RR target where the sell trade was closed at 97.718 from 98.143 entry for +42.5 pips (+2.5% gain risking 1% on every trade).
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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