This Forex trading example involves a Hammer Candlestick pattern, which signalizes the end of a decrease and the beginning of an increase. All this happened into a Forex channel, which gave me a better picture about the scope of my Hammer Reversal candle trade. I traded until the price reached the upper channel level.
Signals for the Coming Price Increase
- The price of the USD/JPY reached the lower level of a bearish channel.
- The price action showed hesitation at the lower channel level, which implies a turning point on the chart.
- A Hammer candlestick closed on the chart, showing that forces might be shifting.
- The next candle closed above the Hammer candle, which confirmed the validity of the candlestick pattern.
Stop Loss and Target of the Hammer Candlestick Trade
I placed my Stop Loss order below the lower candlewick of the pattern. If the price reaches that area, this will minimize the chances for successful outcome from the trade.
My target was at the upper level of the yellow bearish channel. However, with the time passing by the upper channel level goes lower and lower. This forces me to constantly readjust my Take Profit order lower and lower. In other words, the quicker the target is reached, the higher the target will be. Fortunately, it didn’t take long until the USD/JPY price jumped and reached the target, meaning that the trade performed pretty well.
Live Trading Example
After few adjustments of my target, the USD/JPY price reached my Take Profit order closing a successful trade. I generated 8 pips from this trade, which equals to approximately 0.07%. Although this is not much, I remind that the trade took only 45 minutes. And 0.07% is definitely a good result for a scalp trade that takes less than an hour. Imagine if we can make 0.07% profit every 45 minutes… NOT!