Live Forex Room Trades EUR/USD – Week Of 10/10/2011
Let’s get right into the first day trade we took in the forex room this week. The was a standard Jump Bar (JB). Again were not really focusing on the candle or bar but rather the median line. This median line helps us sift through the volatility we have seen lately in the forex market. First and foremost, to be a JB the median line needs to close above or below at least 3 previous median lines. The JB marked here closed above 7 previous bars median lines thus fulfilling that criteria. When this happens you also want the bar closing above its 50% point. This bar could have closed at its lows which would have shown rejection, and the median line would have been in the same location. Therefore in the case of a JB up it needs to close above its 50% point, and in the case of a JB down it would need to close below its 50% point. Additionally this bar closed with higher volume than the previous candle showing an increase in intent, thus fulfilling the 3 criteria for a JB.
We closed this day trade for +30 pips on half and the second half was closed for break even. The market came back and stopped this trade out at break even on the last half before running and hitting the final +150 pip take profit. Another point worth mentioning is the bar right before the JB. Notice how that bar tried to test the lows and set a higher low? Additionally it closed as a reversal bar which was bullish sign. The market tells a story as it progresses through a session. Its important to read not just one section but the overall picture. By understand what each move is telling your its easier to determine weather or not you have a valid entry signal. With the JB forming right after that reversal bar the picture became much more clear Â day trading opportunity.
We had a very similar day trade setup in the forex room on Thursday. Notice the consolidation just prior to the move down. Have you ever noticed that when the forex market moves from consolidation it is often a nice move? Have you ever wondered why that is? Most simply view this as an area where the market is resting, or where no one wants to put their money on the line and push the market. If the market makes good moves out of consolidation wouldn’t it make sense that these areas are not just a time of rest for the market but rather a time of accumulation?
Therefore if smart money is accumulating during this period, I want to be in when it breaks! This is a great way to use the Jump Bar (JB). Again it needs to fulfill 3 very simple criteria to be a JB.
1.) The median line of the bar must jump above or below at least 3 previous bars.
2.) If the median line jumps above 3 previous median lines then that bar needs to close above its 50% point, and if the median line jumps below 3 previous median lines then that bar needs to close below its 50% point.
3.) In order to be a JB it needs to close with higher volume than the previous candle which shows an increase in intent of direction.
The bar with the arrow pointing to it finally broke out of the consolidation that is circled. Although it didn’t jump out by much it did fulfill the 3 criteria mentioned above, thus giving us a valid JB and we took the entry short. We managed to take +20 pips on half of this trade. There wasn’t a huge amount of follow through with this trade but profit none the less.
The JB forex trading strategy is a good way to capitalize on the break of consolidation. Using the median line to determine when to entry helps avoid fake outs often associated with consolidation breaks. If you would like to get live Forex Training during both the New York and London session then check out whats included with our Forex Day Trading Course