Basic Details Of The Setup
An inside day is found on the 9th of September 2019.
The USD/JPY has been ranging since the 5th of August 2019. An inside day is formed on the 9th of September and it is at the breakout of the 1-month of consolidation. Based on our system, when an inside day is spotted in the trending market or at the breakout of the ranging market, we have a trade setup.
The inside day is also formed at the resistance level 107.15. This tells me that I should let the market decide whether it will be a breakout towards the upper of the resistance level or it is a reversal to the south.
Mother bar details:
High: 107.24
Low: 106.34
Range: 90 pips
The lot size of the trade is $140/90pips = 1.55 Lot
The pending orders are the following:
Buy Stop 1.55 Lot @ 107.24, SL: 106.34, TP: 109.04
Sell Stop 1.55 Lot @ 106.34, SL: 107.24, TP: 104.54
Progress Of The Orders
Day 1: 9th September 2019
The buy stop order is triggered and I have closed the sell stop order to avoid over-trading. It formed a bullish candlestick at the end of the day. A good start for this trade setup.
Day 2: 10th September 2019
Another day with a positive floating profit. A bullish candle gives a positive vibe for this setup. Perhaps this is the power of the breakout trading.
Day 3: 11th September 2019
3 straight days of a bullish trend! This sends a very strong signal that this pair is going to surge higher in the coming days.
Day 4: 12th September 2019
Today is the 4th day of the bullish trend. Hopefully, this streak will never stop until I hit my target. It is still halfway before that happens. The sellers were in control of the market at the beginning of the day but the buyers regained their control before the end of the day.
Day 5: 13th September 2019
A small Doji is formed. It just temporarily gave the pair a short break. There was not much movement today for USD/JPY.
Day 6: 16th September 2019
It is a Monday. The pair started with a huge price gap in the downward direction. Luckily it has recovered fully at the end of the day. It closed at the same price as the previous candlestick (Last Friday). However, it formed a very nice bullish candlestick. This indicates that buyers are in the market.
Day 7: 17th September 2019
A shooting star is formed. The market again closed around the same price as the previous day. This market is having difficulty to decide which direction it is heading. I am curious about where it will be tomorrow.
Day 8: 18th September 2019
Sweet! A strong bullish candlestick is formed today. This is good news. It seems that the market has finally continued its uptrend. I am more than halfway towards the target price of 109.04.
Day 9: 19th September 2019
A reversal of trend happened here. Well, I am not sure yet. The price closed around the opening price of the previous day. It shows a strong rejection from the above. It could mean sellers are in control now.
Day 10: 20th September 2019
It was another bearish day. It tells me that the market is heading towards the bearish direction. It is not good for my trade. However, I am still a little bit positive in the profit.
Day 11: 23rd September 2019
Today the market did not move much. It was again a bearish day. I have no worries since the market is still hovering above the previous ranging market. As long as it is not breaking the support, the market has the potential to continue its bullish movement.
Day 12: 24th September 2019
This is the 4th bearish day in a row. And the price has finally broken the support level of 107.24 and it closed below it. I have to see what is going to happen tomorrow. Anyway, I will be only observing and I will do nothing to change the exit strategy.
Day 13: 25th September 2019
It was a bullish day. The price suddenly made a good bullish movement to cause the candlestick to form a big bullish candlestick. And the price closed above the support level of 107.24. It is good for me.
Day 14: 26th September 2019
The price did not move a lot today. Even though a bullish candlestick is formed, but I can see that the price is reluctant to move. Long head and tail are formed with the candlestick.
Day 15: 27th September 2019
Again, the same bullish candlestick as the previous day is formed. It shows a sign of market consolidation. The sellers and the buyers have equal strength in this scenario. Nobody can certainly say which direction the price is going.
Day 16: 30th September 2019
An inside bar is formed today. If I am not trading USD/JPY right now, I will also not take this inside bar as a confirmation to enter the trade. The reason is obvious. The market is ranging right now for USD/JPY. As I mentioned in the Penguin Inside Day System, I only will trade in a breakout market or a trending market.
Day 17: 1st October 2019
It was the first day of October. The market has decided to go a little bit bearish. While it remains above the support level, it is also still in the ranging market.
Day 18: 2nd October 2019
Oh no, a big bearish candlestick is formed. And it even closed below the support level of 107.24. It is not a good sign for my trade. I can see that a bearish trend might have already taken place. Fingers cross.
Day 19: 3rd October 2019
15 pips before this position is terminated! The price moved south a lot. However, it closed a little bit higher. I am halfway to my stop loss. It is okay. This trade is too long. Today is day 19. I am seriously fine if it ended up in a lost position.
Day 20: 4th October 2019
An inside bar is formed. This is a great inside bar. The mother bar is about 90 pips and it formed near the support level. I would enter a position here if I haven’t had done it with the current position.
Day 21: 7th October 2019
It was Monday again. A big gap happened when the market opened. The price has moved bullish and cross the high of the previous day inside bar mother bar. It means the direction of the market now can be bullish.
Day 22: 8th October 2019
Another inside bar is formed. For those who missed the previous inside bar entry, this one is another valid entry. It has a good mother bar size and as well it happened near the key level 107.24. You can set 2 pending orders, a buy stop order, and a sell stop order.
Day 23: 9th October 2019
A beautiful bullish candlestick is formed. Yesterday inside bar setting works. It closed above the 107.24 level. My trade is again in the green area which means a profitable area.
Day 24: 10th October 2019
This is it. Finally, after long waiting, I mean a long waiting. The price has finally made a big upward move. It gives the market a strong signal that it will continue the bullish trend.
Day 25: 11th October 2019
Another beautiful bullish candlestick is formed. I am very sure now that the market has decided its direction after so many days of consolidation. It is going upward.
Day 26: 14th October 2019
Wow, another inside bar is formed. I love this pattern because, during a trending market, it shows a short pause before the price continues the trend. And good news for all of us is that this is another valid inside bar setup. You can set 2 pending orders, buy stop and sell stop orders because the inside bar is formed near the resistance level.
Day 27: 15th October 2019
I believe this trade will end soon. It formed a bullish candlestick and its high is about 13 pips below my target level. So close yet so far. It should be very easy to achieve another 13 pips.
Day 28: 16th October 2019
An inside bar is formed. It is a valid pattern for an entry. I would set 2 pending orders because it is formed near another resistance level. I am also happy with the form of this inside bar. It shows that the market is going to continue in an upward direction.
Day 29: 17th October 2019
It has formed a bearish candle with the high of the candlestick exceeded the high of the mother bar from the previous day inside bar pattern. If you have set up a buy stop order, then you are now in a long position.
Day 30: 18th October 2019
I am a little bit further than the target price because it was another bearish day. The price has not moved a lot. I feel that another ranging period is here.
Day 31: 21st October 2019
The price did not move much, about 30 pips only. The market of USD/JPY was not active as the other pairs recently. It formed a bullish candlestick at the end of the day.
Day 32: 22nd October 2019
It was another slow day. The market is in a consolidation period. It is so close to the target price, but there is no momentum for it to move aggressively upward.
Day 33: 23rd October 2019
A bullish candlestick is formed. I hope it will give the market a little bit of pushing toward the north so that I can finally close this position.
Day 34: 24th October 2019
Today the market has moved only 25 pips! This is a slow-moving period. Patience is the keyword when we are dealing with a slow market.
Day 35: 25th October 2019
Another slow day. It is very near to my profit taking price. It shall be done soon. It is the weekend again.
Day 36: 28th October 2019
Finally, today is the day. The high of the candlestick has touched the take profit price. I am in profit and I am happy about it.
Overview Of The Setup
This is a better image of this setup. Feel free to use it to share with your friends as you learning together.
Conclusion
This is a very long trade and I have certainly learned a lot from it.
The first thing I found out after seeing the result (Profit: $255.87) is that for JPY pairs, the value of 1 pip is about $0.9 and not $1 as the normal pairs have. So what I should do is that I will divide the calculate lot size by 0.9. In this example: 1.55/0.9 = 1.72. By doing so, our stop loss and take profit will not sway too far from $140 and $280 respectively.
The second thing is the mother bar range (It is used to calculate stop loss). On day 19, I almost hit my stop loss. Thank the big mother bar, the position is not taken out. I think, from today onward, the requirement for the mother bar range should be around 75-100 for normal pair and 100-150 for GBP/JPY.
Of course, we can determine a better mother bar range by ATR (Actual True Range). I will look into it once we have traded enough positions.
I hope all of us learn something from this trade. It was good patience training.
Best Regards
Engedi
