This time the live Forex trading example covers a trade taken on the M15 USD/JPY chart as a result of a Forex consolidation breakout. The consolidation comes after a sharp price decrease and a breakout through its upper level was the reason why I opened a long trade on the general assumption that the price is likely to increase.

Signals for an Upcoming Price Increase

1. The price has been following a bearish trend recently.
2. After every bearish impulse, the price creates a consolidation and a correction.
3. The pink lines indicate the consolidation that came after the price increase.
4. The price created ascending bottoms on the chart.
5. The USD/JPY shows a confirmed Rising Wedge chart pattern on the 5-minute chart.
6. The price broke the upper level of the pink consolidation.

Stop Loss and Target of the Forex Consolidation Breakout

I decided that the best place for my Stop Loss order is at the level that contains both the last bottom and the candle bodies of the bottom before. At the same time, this level matches with the approximate mid-point of the consolidation channel at that time.

My target in the Forex consolidation trade stays at a distance equal to the size of the pattern itself. Notice that I measure the vertical size of the consolidation and I apply it starting from the moment of the breakout. In this relation, my Take Profit order goes at the top of the rectangle you see on the chart. This rectangle represents the size of the consolidation.

Live Trading Example

The price of the USD/JPY did not manage to reach my target. However, a bullish spike appeared on the chart. I used this bullish activity to adjust my Stop Loss order above my entry point. This way I guaranteed myself a risk-free trade – I am in the market without any real chance to lose anything. Later on, the price hit my Stop Loss order and my trade closed on slight profit.

Muhammad Awais