*A simple day trading set up utilising a few technical indicators*
Here is my live market analysis of the AUDJPY FX currency pair as at today, 3rd July 2019. I am looking to enter a simple short position day trade on AUDJPY with the intention of capitalising on the current daily bearish waves on the lower timeframes.
This day trading strategy is one I have used for a while and have previously covered in multiple blog posts. I have also written a full trading strategy guide for those of you who are interested. It is available on the Amazon book store and can be found by clicking here or on the image below.
Let’s get in to the charts and I will show you why I have entered a short position on this FX currency pair.
As with most day trading strategies, it takes place on the lower timeframes such as the 15minute or 1hr. The chart above shows the last 3 days of price action for AUDJPY and hopefully, you can see straight away that price is moving in a bearish direction with lower highs and lower lows being made. I have marked on the lower highs with yellow circles for your convenience.
The main thing I look for when trading this strategy is to make sure I am on side with the current trend to help with the probability of my trade being a success. The highs and lows are one way to identify the trend but I also use the alignment of the 50ema and 200ema. These are on the chart and yesterday the 50ema crossed below the 200ema which is a sign of the trend becoming bearish.
When looking for an entry I like to use as the daily pivot level. If you are unaware of what the daily pivot levels are and how they are used in trading then I highly recommend you read up on them. The daily pivot point often sees a lot of price reactions due to its use by many traders across the world.
As you can see on the chart above, when entering a short position, I like to look for a new lower high to form and reject the daily pivot from below with a favourable bearish candle. This could be a bearish engulfing candle like I have seen here on AUDJPY or it could be a nice wick rejection or a combination of both. This is my signal for an entry.
The chart above is a close up look at my short position entry. You can see the strong bearish momentum candle closed below the daily pivot level which I believe is a good indication there are sellers at this zone. I place my stop loss above the highs of the current candle to keep it out of the way of any volatility and my initial target is set at the daily R1 level.
This initial profit target gives a reward:risk ratio of 1.28R which is good for a potentially quick day trade. I personally won’t take a trade with an R of less than 1 so it is always good to check this out before entering.
You can also see I have a second position marked out with an extended target profit of the daily R2 level. I often use a further method of extending my reward:risk of positions by holding to the daily R2 level if momentum is present in the market. In this scenario on AUDJPY, this would increase the return of the trade to 2.33R.
As with most of my analysis, you can track this trade live on the TradingView platform by clicking on the link below. There is lots of my market analysis on there for you to read through and learn from for FREE 🙂
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DISCLAIMER: None of the information posted on this site is to be considered investment/financial advice. Trading is high risk and you should only trade with money you can afford to lose.