ANALYSIS OF A EURJPY BREAKDOWN
Analysis of a EURJPY Breakdown
Take a look at one of our latest breakdowns on the EURJPY chart as we give Forex traders an insight into our charting tools.
This time, we’ll dissect the EURJPY and look at some of the most recent pieces of analysis that have 90% of the time played out correctly in recent months. We also take a look at the current chart and predict the outcome.
We show you some of the predefined rules we follow and what we allocate ourselves to place into the chart as we look through the different timeframes and analyse the Forex market. As we review the old analysis in our journal, it becomes clear how important it is to save this data in order to learn from it and construct a narrative for future trade setups.
Tools and overall chart structure
The trend formations on the weekly and daily charts have largely determined the overall chart structure we’ve employed in recent months and years. When it comes to being in a Forex trade, we try to keep things neat and establish chart clarity to avoid any confusion. The bias and momentum should be clear, and you should stick to your levels unless any of your key levels break in the wrong direction or to avoid volatile news.
If you have been holding open deals for a long time, news announcements can be detrimental. The volume can create a spike on the chart. As a result, it’s occasionally a smart idea to prepare ahead and close weak positions in advance.
Do you ever feel like you’re lacking in clarity or that you’re losing sight of the broader picture? Then, if there is any mess, it is a good idea to step back to a higher timeframe and tidy up. On the other hand, if you require more information and detail, reduce the timeframe, add more tools, and be creative.
Higher timeframes
We can collect data about larger momentum shifts occurring on higher periods, as we’ve indicated before. In the video, we cover what tools we allow ourselves to use on the monthly and weekly charts, as well as how to build circular levels with clear pricing labels.
We can then use our tools to create confluences in order to establish a broad target and destination. This is the most important part of the trade – the level at which you intend to exit the foreign exchange market.
When we identify these targets, they are usually 75 to 300 pips away, giving us plenty of room to profit from the setup. We can then build upon our other aspects of the trading setup to establish a positive risk to reward ratio.
Lower timeframes
We look for more rapid price swings and construct a plan for where our trading levels will lie on the four hour and one-hour timeframes. By now, you should have your overall targets and destinations set in play.
Thus, it comes down to how precise we can make our entrance in relation to the general trend. On lesser timeframes, we might seek to confirm a setup and trade inside the immediate momentum using trendlines, trendline breakouts, Fibonacci and other breakout patterns.
