The first rule of our strategy is to identify strong and weak currencies so we can pair them up.
At the London open, the AUD (orange line) is clearly strong and has been trending up. However, we look at the far right to see if there is a steep line which would indicate current momentum in the market. In this case, we don’t have that.
Same on the downside as the JPY (yellow line) has been trending down but it’s been trading flat more recently.
So in this case, instead of entering immediately with a market order, we would place a pending buy 10 pips above the current price. That way, if the trend continues your order would be triggered with momentum (and the trend) on your side. If not, you won’t be triggered at all and have no capital at risk.
This pair did continue up and your order would have been triggered where the first red arrow is. From there, price moved up 34 pips giving you a quick and easy breakout profit.
You can watch the full video analysis here: