The new trading example today is on the USD/JPY Forex chart. The price action created a bullish triangle breakout that appeared after a big swing on the chart. The further activity of the price created a good trading opportunity in bullish direction.
Signals of the Bullish Triangle Trade
- The price action dropped drastically on mixed US Jobs Report data. However, a pullback occurred and the price started increasing.
- The triangle pattern was a signal that the price action is slowing down and a new move is about to come.
- The bullish triangle breakout hinted that the previous bullish move starts over again.
Stop Loss and Targets of the Triangle Breakout Trade
I put my Stop Loss order below the lowest point of the triangle pattern. This protects the trade from unexpected volatility swings. After all, if the price action breaks the lowest point of the triangle, we should give up on our bullish thoughts.
I placed my take profit order at a distance equal to the vertical size of the triangle pattern in its widest part. As you will see in the video, I measured the size of the Forex triangle with a rectangle, which I simply moved and applied starting from the moment of the breakout. The top of this rectangle was the level at which I placed my take profit order.
Live Trading Example
Notice that I approached this chart pattern as a Triangle and not as a Pennant. The reason for this was that the potential pole at the left side of the pattern appeared due to economic events related to the USD and not by natural price action. Imagine if there was no US Jobs Report release at this day. In that case we would have stayed only with the triangle, which I traded any way.
Bottom line, the bullish triangle trade was absolutely profitable and led to profit of 30 pips and 0.27%.
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