USD/JPY breakout

[UKtradergirl]

Just wanted to post a trade setup i am looking at that looks as though it may be a good one. I don't trade currencies that often but this one looks good.

A nice triangle formation going on here, at a guess i'd say the price will break downwards. When it does it has some way to go before it hits major support. See attached graph. Saying that, it could break upwards too (less likely). Either way i'm ready to jump on board.

I wanted to post this as an example of how simple trade setups can be. I have also posted this before the event so you can see i don't have the benefit of seeing the outcome first

 

[UKtradergirl]

Oops sorry the chart came out so big. Can't seem to change it now.


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i changed it much better size now.

 

[counter_violent]

Hmm even if it does break One way or tother...there is no news around to drive it...so I expect it will be a false break and will probably end up back inside

 

[counter_violent]

Entry price ?

 

[UKtradergirl]

You are right, right now isn't the best time to be trading. I have decided i won't be holding this trade over a very long time period.

Currently 35 points up. Entered at 96.76. As this is not a great time to be trading i'm considering exiting the position very soon instead of holding overnight. Can always look again in the morning.

 

[UKtradergirl]

Entry price ?

Entry as per my previous post... but if price starts bouncing back up off the other line i will exit. (quite likely- but hey i hope to get at least 15 points tonight- that's gotta be worth something, hehe).

 

[counter_violent]

You are right, right now isn't the best time to be trading. I have decided i won't be holding this trade over a very long time period.

Currently 35 points up. Entered at 96.76. As this is not a great time to be trading i'm considering exiting the position very soon instead of holding overnight. Can always look again in the morning.

Good decision...it's on the trendline and for what its worth you played this right....waiting for a break of a triangle is what all the amateurs do....playing the trade to the trendline gives a head start...and more options

 

[UKtradergirl]

Good decision...it's on the trendline and for what its worth you played this right....waiting for a break of a triangle is what all the amateurs do....playing the trade to the trendline gives a head start...and more options

Ahhh come on triangles are a great way to trade. It is important to take them in context though. Triangles within triangles, and in relation to other support and resistance lines. You have to also understand the problems with them (false breaks that only move a couple of points, etc). But they work, and allow you to use very tight stop losses (i had a 8 point stop on this trade).

"what all amateurs do"--- really, there are far worse strategies that experienced traders follow.

 

[UKtradergirl]

Ok i have exited now. The candle did break through the next triangle. Doesn't look good enough or strong enough for me to want to hold the trade though, and i wouldn't be opening a new one here-- especially not at this time of night. It still might work out to be a good trade though- time will tell- and if you did take this one you could use a tight stop to prevent anything bad happening .

I got out for +34 points. Happy with that.

 

[bfd]

Thanks for sharing your trade, its very useful for a beginner like me

I just had a couple of questions.

Is the difference between a triangle like this( made from converging trend lines) and a trend made out of parallel trend lines, that the triangle implies that one of the trend lines will be broken when the two trend lines meet?

Would you rather have waited until the price broke though one of the trend lines ideally... because didn't you make your trade when the price was at the top of the trend line anticipating that the price would therefore come down, (because that is what happened previously when the price reached the upper trend line)?

I'm just trying to understand exactly what your justification for making this trade was.

Thanks.

 

[bfd]

Hmm even if it does break One way or tother...there is no news around to drive it...so I expect it will be a false break and will probably end up back inside

Don't lots of successful traders make their trades based purely on technical analysis without looking at any news?

 

[counter_violent]

Don't lots of successful traders make their trades based purely on technical analysis without looking at any news?

No quite the contrary...the best traders use a mix but with a heavy bias toward fundamentals.

Something to think about perhaps...fundamental technicals....

Update chart showing what can and does frequently happen concerning errr triangles.

 

[jeffsmith]

Ahhh come on triangles are a great way to trade. It is important to take them in context though. Triangles within triangles, and in relation to other support and resistance lines. You have to also understand the problems with them (false breaks that only move a couple of points, etc). But they work, and allow you to use very tight stop losses (i had a 8 point stop on this trade).

"what all amateurs do"--- really, there are far worse strategies that experienced traders follow.

Hello UKtradergirl,

Triangles are great tools to trade. Once can trade triangles and book some profits. But i have not seen these new trading tools so much affective what i have experienced if you trade according to your strategy.

 

[UKtradergirl]

Hi,

I merely put forward an example of a trade. I showed you the chart before i entered the trade. I entered the trade. Showed you my account so you could see i did it.

Yes, counter, if you had entered on the second break it wouldn't have worked. But with a stop loss of around 10 pips if you had chosen to enter this trade i don't believe it would have been a bad thing. (if i had entered i would have been looking for 30 to 40 pips).

Yes, triangle are not infallible. They fail. I never said they work 100% of the time. The trade i actually entered could have just as easily ended in a loss. Even if triangles only work 50% of the time i don't care because my risk is small and the reward at least 2 times, but more like 3 or 4 or 5 times as great as the risk.

I don't trade triangles exclusively they are just one of several patterns i like looking for in price action. With any way of doing things there can be drawdowns and consecutive losses- triangles no exception. Perhaps i was just lucky my 'real time' trade worked out? But either way, i think people will find the losses acceptable compared to the reward.


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BFD- regarding this pattern. This is specifically about triangles. There are ways to trade other kinds of lines too, this is just one example. I am specifically looking for triangles here, especially if the price bars are constricting very tight and getting very close to the 'point' (apex) of the triangle. Actually, you don't need two triangles at all to trade this- i just use the second triangle as a profit target. If there was only one triangle obvious you could decide your own profit target based on previous volatility, the length of prior moves, etc .

The smaller the price bars have constricted the better as your stop correspondingly gets smaller and smaller too.

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Jeff- i'm glad you can make profits from triangles too. I'm not surprised you didn't profit from my strategy- because there wasn't one there .

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Note: i am not putting forward a strategy- a 'do this and you'll profit' strategy. It is just an idea, an example of the way i trade. Take a simple idea like triangles, trendlines, whatever you want, add your own rules and experiment with it until you find a way that works for you. I could add an exhaustive list of my rules here but i don't think it would help anyone- as the list is very long and something i just do automatically without thinking to 'filter' my trades before i take them.

 

[UKtradergirl]

Oh, just wanted to add. Regarding fundamentals. I don't care what the fundamentals are when i'm taking shorter term trades. Infact, a news event shows itself very well technically on a chart (yes, a breakout!) without needing to clog up your trading routine trying to listen out for news. Price action, price action, price action for me.

Again, Just My Opinion. Not claiming fact- just my reality.

 

[gamma]

The way to trade news is to simply avoid it.

 

[counter_violent]

For goodness sakes....since when did fundamentals equate to news !

Price ( technical, real, smart money, big money ) makes a move ahead of news releases...to price in the (likely, anticipated numbers, reality ) news event.

Take forex...fundamental drivers might be, interest rates, unemployment, etc....these are fundamentals which move markets...but the point is, they move markets ahead of actual news release.....only when the actual news release is way different to the already priced in expectation, do you see a corrective news release price move.

The most recent example of price and fundamentals at work can be seen in the unwinding of the carry trades...smart money knows in advance that the unwinding has to take place....eg GBP JPY....U K had relatively high interest rates where as Japan had low rates but the unwinding as represented by price technical/fundamentals started moving way ahead of the west slashing interest rates and the subsequent news event...ie the announcement of any rate cut.

 

[UKtradergirl]

For goodness sakes....since when did fundamentals equate to news !

Price ( technical, real, smart money, big money ) makes a move ahead of news releases...to price in the (likely, anticipated numbers, reality ) news event.

Take forex...fundamental drivers might be, interest rates, unemployment, etc....these are fundamentals which move markets...but the point is, they move markets ahead of actual news release.....only when the actual news release is way different to the already priced in expectation, do you see a corrective news release price move.

The most recent example of price and fundamentals at work can be seen in the unwinding of the carry trades...smart money knows in advance that the unwinding has to take place....eg GBP JPY....U K had relatively high interest rates where as Japan had low rates but the unwinding as represented by price technical/fundamentals started moving way ahead of the west slashing interest rates and the subsequent news event...ie the announcement of any rate cut.

OK i stand corrected, regarding news and fundamentals.

Either way, i still don't need to know them for short term trades (again, just my opinion- not saying this is fact). But thanks for clearing the point up .

 

[montmorencyt2w]

I guess it never does any harm to keep an eye on the fundamentals that are most likely to affect the market you are trading, e.g. interest rates for currencies, crude price versus USD, oil imports/exports versus USD/currency X, etc, or when some important Suit is making a big speech; or an election...

Even in the short-term, there still might be a major trend going on in the background, which will affect your trade.

Anyway, thanks for showing us your setup & trade UKtg. I learned something and it is appreciated.