Forex Trade Example (14 May 14)

With the market waiting for Bank of England's inflation report and several European countries announcing their CPIs, most pairings were heading sideways as investors were being cautious. Nevertheless, there is still enough volatility to trade on the 5 min chart. Below shows 2 trades caught on the EUR/JPY pair.
Disclaimer:  This is purely for sharing purpose only, not a trading advice or instruction.

Trade 1

Trade: Downtrend reversal confirmed by higher high. Buy at pullback. Upward momentum wasn’t strong enough, so got out quickly at 0.5 pips.

Review: It’s good to get out of a position you feel uncomfortable in and re-assess.

Trade 2

Trade: End of pullback after hammer doji and 3 bar reversal signal. Buy when next bar hits a lower price. Took profit at 5 pips.

Review: First pull back of trend reversal was made clearer by doji. Took advantage of fluctuations to take a lower long position in order to maximise profits.

Summary

Be it higher high, lower lows, dojis, big green/red bars, the more signals you see, the stronger the momentum,  the higher the probability of the trade. Dojis alone mean nothing if there is no confirmation bar after. A doji only signals uncertainty between the bulls and bears. The next bar will tell you whether the bulls or the bears are in control. This direction must also coincide with the general trend before you decide to take a trend following position.