There were several patterns that signalled the USDJPY pair would rally higher on November 10 2021. Since the start of 2021 USDJPY has been trending to the upside so it would only make sense to trade with the trend and not against it.
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. Bullish harmonic pattern triggered buyers at the XA 1.27% Fib. retracement level (Pink)
2. Bullish AB=CD pattern triggered buyers at the equal legs level (Blue)
3. Price bounces off the Dynamic Support 200 MA (Black)
4. RSI buy triggers above the 50 level
5. Stochastic in oversold levels
USDJPY 4 Hour Chart November 10 2021
Entered the BUY trade at 113.41 with Stop Loss at 112.71 and Targets at the 1:1 RR minimum with full target at the 1:2 RR. USDJPY moves higher and on November 16 2021 price hits 1:2 RR target at 114.81 from 113.41 for +140 pips (+2% gain risking 1% on every trade)
USDJPY 4 Hour Chart November 16 2021
A trader should always have multiple strategies all lined up before entering a trade. Never trade off 1 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 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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