Now for the most important part of the trade, selecting your takeprofit (yes, just like “stoploss” it’s usually spelled as one word, and often abbreviated as TP).
For a takeprofit level I would be watching three different areas, the first S&R zone (around 133.40), the area around the upper trendline, and the upper S&R zone (around 134.80). If the price started to reverse around either S&R zone or the trendline I would take my profit and be out of the trade, but if it moved through I would let it run!
If I had to exiting this trade with an automatic TP (because of work, sleep, etc) then I’d set my TP level a little under the trendline. The lower S&R zone is too low to really consider it a profit target (if I had to get out here I would, but I’d consider that a failed trade, even though it made a little profit).
The upper S&R zone is too risky for an automatic TP. There’s just too slim of a chance price will go that high, so if we’re not around to watch our charts it’s not a good TP level.
The safe bet for an automatic TP is a little below the trendline. You may lose some profit, but if you have a full-time job sometimes that can’t be helped.
Let’s look at the chart after the trade is completed.
As you can see, the candle after our entry flew straight through the lower S&R zone, and the candle after that flew through our trendline. The IB that formed on the upper S&R zone is our signal to exit, since that’s a reversal sign and shows the price is probably finished rising.
If you got out on the close of the IB formation you would have gotten 240 pips with a 120 pip risk, which means your account grew by 4%.
Well, that’s it! You’re now a Forex trading machine… Or at least you will be after some practice.
Speaking of practice, remember to check out the rest of SmartMoneyForex.com. You’ll find a lot more information about my trading method, including my weekly analysis videos, my blog where I post live trade setups, and a forum to get all your questions answered.
Good luck in your trading,