AUD:JPY – Strategy Update

Hi,

The AUD:JPY triangle set up I posted yesterday is close to breaking to the downside.

I thought it may be useful to post some brief thoughts on an approach to entry and exit levels for readers interested in following this set up.

AUD:JPY Daily. Source: Bloomberg

  • The entry set up applies a filter and waits for price to clear the triangle support ( in this case by 25-30 pips) before selling
  • The initial stop is just behind the triangle resistance.
  • If price makes 61.8% of the distance from the break point to the profit objective, a one candle trailing stop is put in place. This is initially placed just behind the high of the candle reaching the trigger level. Once a candle makes a low below the 61.8% level the stop is left at that level
  • The profit target projects the height of the triangle from the break out point. A small price filter is applied to this projection

Cheers

Ric

About Ric Spooner

Over 30 years market experience - professional trader, broker, director
This entry was posted in Forex, Market, Trading. Bookmark the permalink.

3 Responses to AUD:JPY – Strategy Update

  1. Barry Seeger says:

    Thanks Ric, I understood all of that until the last sentence…”A small price filter is applied to this projection”

    What does that mean please…a small price reduction, maybe?

    • Ric Spooner says:

      Hi Barry,

      What I was trying to get at here is that a limit order is placed to buy the postion back at 82.06 rather than at 81.81. The difference between the 2 ( in this case 25 pips) is the filter

      81.81 is the level calculated by deducting the height of the triangle from the point at which price would have intersected the triangle support line had it broken through it yesterday.

      However, the strategy is based on an assumption that overall results can be improved over time by taking profit a bit above the projection target rather than waiting for each trade to reach exactly that level

      I hope this better explains the idea

      Cheers
      Ric

  2. Barry Seeger says:

    Yep, that’s good…thanks.

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