Looking at a weekly USDJPY chart, you will notice that we have embedded weekly Master Candles set up. For those of you unfamiliar with Master Candles, they are candles that engulf the next four following candles. Trading a break of a Master Candle on any time frame can be very profitable, but trading a break of a weekly Master Candle can be especially profitable.
Usually, when I trade hourly master candles, I place my stop on the opposite side of the master candle. If the candle is too wide to maintain my risk parameters, I will place my stop in the center of the master candle. Since this master candle was around 385 pips wide, I planned to trade the break as if it were a break of a lower time frame candle and try to set my risk around 50 pips. That way I will be able to trade the break with decent size and hopefully get a piece of the initial move. Also read our Forex success program.
In this example, the price action was about 25 pips above the low of the inner master candle which is near 88.95. I placed a pending sell order at 88.85 to allow for a head fake and I'm setting my stop at 89.35. When I have 20 pips profit, I took 1/3 of my trade off and move my stop to break even. From there, I followed my stops down using the hourly chart, placing my stop at the top of the prior hourly bar.