On March 7 2022 I posted on social media @AidanFX “ NZDJPY Expecting another rally higher. Watch for buying opportunities.“
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.
BUY Trade Setup
1. RSI Indicator Bullish Trend Continuation Divergence (Pink)
2. Price respects the Dynamic Support 50 MA signalling more upside (Light Blue)
3. Stochastic Indicator in oversold levels
4. Price hits Static Support/Resistance Level (Dark Blue)
5. Bullish Market Pattern triggers BUYS at the point D XA 0.886% Fib. Level (Purple)
NZDJPY 1 Hour Chart March 8 2022
Entered the BUY trade at 78.57 with Stop Loss at 78.05 and Target at 79.61 (1:2 RR). NZDJPY moves higher and on March 10 2022 price hits the proposed 1:2 RR target at 79.61 from 78.57 for +104 pips (+2% gain risking 1% on every trade)
NZDJPY 1 Hour Chart March 10 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 NZDJPY move higher. 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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