This time I combined a 10-period and a 20-period Simple Moving Average indicators with the Volume indicator. I managed to recognize signals from these tools and to do a successful long trade in the USD/JPY chart.
Moving Average and Volume Indicator Signals
- The 5-minute chart of the USD/JPY shows a price increase and a big distance between the two SMAs.
- This means that the price might be exiting a consolidation in bullish direction.
- That consolidation resembles a Double Bottom chart pattern.
- At the same time, the Volume indicator shows increasing trading volume, which means that the price might create a big move.
- On the 1-minute chart we see that the slower 20 SMA has supported few times the faster 10 SMA.
- On the 1-hour chart we see that the general bullish trend is strong.
- The 1-hour chart shows that the price is bouncing from the 20-period SMA.
- The 15-minute chart shows a bullish SMA crossover, which supports the general bullish idea.\
Stop Loss and Target of the SMA Trade
I bought the USD/JPY placing a Stop Loss order at the top between the two bottoms of the Double Bottom pattern.
I didn’t state a certain target on the chart because I had no clue for how long eventual price increase might have lasted. Therefore, I observed my trade very carefully, which put me in a very good position to exit the market.
Live Trading Example
The price created a shocking increase just for seconds. The good thing is that I was constantly watching my trade. I considered that it is better to exit the trade on the top of that move without waiting for a further extension. After all, volatile price moves often continue with big pullbacks. Therefore, I closed my trade and I collected my profit.
Bottom line, the trade generated 0.22% for less than 20 minutes.
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