Day Trade Breakdown – NZDJPY November 2020

*A review of highly effective short duration trade on the NXDJPY FX currency pair*

Welcome back to the blog! I hope you have all had a very productive week so far and are heading in to the weekend with good vibes and positivity. I am not one to talk about mental health or things outside of financial markets trading but I do believe that the world is a very different place at the moment and we should all take a minute to check we are still feeling as well as we should be!

In this post I am going to talk you through a day trade I entered and exited this week which proved successful. I will show you every point of analysis I used when looking for this trade set up and the clever readers amongst you might be able to use this information to build a pretty good idea of what my day trading strategy criteria looks like.

Let’s get right to it and take a look at the 1hr timeframe chart prior to the trade entry. In this instance, the 1hr timeframe was used for my higher timeframe analysis and the trade was actually entered on the 5 minute chart.

NZDJPY 1 hour timeframe chart. Pre-trade analysis.

My higher timeframe analysis for this trade was daily simple. I had identified that the recent intraday bullish trend was potentially reversing as price had broken down through a bullish trendline and gone on to make a lower low. From there price had retraced, forming a bullish counter trendline (CTL) and started to form a lower high.

Simple trend analysis should never be under estimated when it comes to finding trade entries on any timeframe and that is why you will see me mention it in almost all of my blog posts.

NZDJPY 5 minute timeframe chart.

My main points of analysis are all shown on the chart above. There was strong bearish momentum in the first half of the trading day (asian session through to early London session) and I believe this was partly responsible for the quick success of the trade. Price retraced into a price zone (72.00) that contained a lot of confluences for entering a short trade position.

The 5min 50EMA was there along with a previous price support/resistance zone, the daily pivot level and because price had made fresh lows that morning, a lower high was expected to form before the daily selling momentum continued.

Because this was a short duration trade designed to take advance fo the selling momentum of that day, I used a much lower timeframe to enter and exit the trade position. The 15 minute or 5 minute chart usually work great for this because there is not a lot of waiting time required to find entry points and you can squeeze out a lot more from market moves than if you were to use the 1hr timeframe chart and wait for candle closures before entering and exiting.

I traded this pair down to new lower lows that actually broke below the daily S1 level which is normally my main target profit for day trades like this. Consolidation soon followed and the selling momentum began to die off once again which lead me to exiting the short trade position upon the next bullish engulfing candle closure that closed on the daily S1 level.

The headline figures for this trade were as follows:

  • Short Trade Entry @ 72.000
  • Stop Loss @ 72.140
  • TP1 @ 71.730
  • Final TP @ 71.720
  • Trade Duration = 6 hours

Let’s take a look at the volatility indicator I am using as part of this analysis. A lot of blog readers and followers message me asking about it because it is actually rather effective when used as part of complete technical analysis.

The CB_VixFix indicator that you see on my charts is something I created in order to visually display the current price volatility levels of a trading period (each candle on the chart) in relation to previous price volatility. It then applies a number to the volatility and plots it on the chart. The theory behind the Vix Fix strategy is well documented on the internet since it was first created by Larry Williams as a way of getting around the limitations of the current popular CBOE VIX which is only available for a select few markets (S&P500, NASDAQ, DJIA).

The basic theory is that levels of price volatility are supposed to increased at market lows and therefore buying at these levels has a higher probability of success. You can read about the Vix Fix by clicking on the link below. It will take you to an old newsletter where Larry explains the process and thought behind the indicator and why it works.

I will show you how I use it on the chart below.

NZDJPY 15 minute timeframe chart vx CB_VixFix Indicator.

What I do is find a level on the VixFix indicator that is showing where the majority of the high peaks in volatility are and forming on the indicator. This does tend to change over time so you will need to constantly monitor it but this helps to determine what is considered as “high” and then “low” volatility. In this case it is 0.400.

you can see on the chart above that 4 out of 5 times that the CB_VixFix indicator reaches the 0.400 level, the price of NZDJPY forms a new low and then climbs a minimum of at least 20 pips and in some cases more. This implies a positive expectancy for the indicator.

The original Vix Fix was designed to be used to find market lows but as like in the case of this NZDJPY day trade entry, I actually used it as part of a larger set of technical analysis to determine a new potential lower high. Extremely low levels of volatility are visible on the indicator and, although less accurate than the high volatility/market low predictions, can be used to find potential bearish reversals in trading.

My Day Trading Strategy Guide.

I am not one to force sell anything and my original and current purpose for this blog is to share as much information and knowledge with you all for no cost. However, if day trading/short duration trades does interest you then I do have a strategy guide avaialbe for purchase.

It costs only £4.99 and the document contains the necessary information required to trade the FX currencies, Stocks, Equities and Oil markets on a day to day basis. It explains, in detail how a trader can look to enter and exit the market and use certain technical tools to create a profitable strategy.

Also included in this strategy guide:

– Visual chart examples
– 2 years of back testing data
– Free trade checklist
– Advanced trading techniques

My day trading strategy guide is available on the Trading Education page of this blog.

If you are interested in learning my personal trading strategies, please consider my Mastering The Markets – Retail Trading Course. Head over to my Trading Education page to check out all of my education packages and the deals available.

Useful Links:

All my technical analysis is done using the TradingView platform. You can get access via the link below.

My preferred broker of choice is IC Markets. Low spreads and trading costs really help long term profitability. A link to their site is below.

FTMO Trader Funding Programme.

Thanks for reading and please don’t forget to LIKE, SHARE and FOLLOW my blog to stay up to date with the latest market analysis and trading education posts.

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.

%d bloggers like this:
search previous next tag category expand menu location phone mail time cart zoom edit close