The USDJPY pair has been trending higher since the start of 2021. Most recent low was terminated on May 24 2022 and has bounced higher since. At the current moment there are visible signs that another round higher could be starting. We, at EWF, always recommend our members 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. Price has made a pullback to the Demand Zone/Liquidity Zone/Buy Zone (Light Blue)
2. Bullish AB=CD triggered pattern in the Demand Zone/Buy Zone (Red)
3. Price broke above the top of ascending triangle but has still not reached the equal length target signalling more upside (Blue)
4. RSI indicator and price forms a bullish divergence pattern (Orange)
5. Bullish 3 Inside Up candlestick pattern (Light Green Box)
USDJPY 1 Hour Chart June 13 2022
Entered the BUY trade at 133.75 with Stop Loss at 133.35 and Target Minimum at 134.55 (1:2 RR) and Target Maximum at 135.75 (1:5 RR). Only time will tell what USDJPY will do.
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. 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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