On May 11 2022 I posted on social media “ EURJPY If price makes a bounce higher towards the 137.60-137.80 area will take a SELL against 138.10 Stop Loss.“
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. Bearish Harmonic pattern triggered SELLS at the BC 0.50% Fib. retracement level (Blue)
2. Price respects the top of the downward channel signalling more downside (Black)
3. Bearish Evening Doji Star reversal candlestick pattern forms (Light Blue)
4. RSI indicator and price form a bearish trend continuation divergence (Green)
5. All patterns form at the proposed 137.60-137.80 SELL ZONE (Pink Box)
EURJPY 1 Hour Chart May 11 2022
Entered the SELL trade at 137.60 with Stop Loss at 138.10 and Target Minimum at 136.85 (1:1.5 RR). The 4 hour chart below shows the AB=CD equal legs Target Maximum at 133.10 (1:9 RR) and 132.60 (1:10 RR) area.
EURJPY 4 Hour Chart May 11 2022
The pair moves lower and on May 12 2022 price hits the proposed 1:9 RR target at 133.10 from 137.60 entry for +450 pips (+9% gain risking 1% on every trade).
EURJPY Daily Chart May 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 EURJPY 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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