EURJPY has been bearish on the H4 chart. The pair made an Engulfing H4 candle from 121.000 and came down up to 119.700. As things stand with the pair, the price is going to head towards the South. Let us have a look at the H4 chart.
As we can see on the chart, the price has started having corrections from 119.700. We have had 3 corrective H4 candles so far. 120.175 could come into play and be the level of resistance. This was a Support level earlier and the price has reacted to this level at the time of breakout as well. Now we should wait for an H4 reversal candle at 120.175. If there is a breakout at 119.700, then we might as well sell the pair. If things go according to this calculation, then we could set our take profit at 118.885 and stop loss at 120.175. This gives us a risk and reward ratio of 1:1.
Summary of the trade
- Sell Stop Order: 119.700
- Stop Loss Level: 120.175
- Take Profit Target: 118.885
It is important that we eye on the trades that have more reward over the risk. Typically, 1:2 is a good risk and reward ratio. However, there are trade setups that come with 1:1 risk and reward ratio and they come very often. In my opinion, if the price action of a chart looks good, then we could trade on 1:1 risk and reward ratio as well. They normally hit the target quickly, so they offer us better winning ratio. It is all about knowing the chart and trend. Study Forex hard, and get more practice; you will learn all of these equations.
Comment below if you have questions on this trade and please let us know if you made money if this trade signal. Good luck!
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The summary of trade seems confusing on the entry and take profit which seems to be only 12pips if we enter trade at 119.000 and exit at 118.885. Aren’t we supposed to enter at price of 119.700 as stated in the analysis?