USD/JPY Signal Update
Thursday’s signal was not triggered and expired.
Today’s USD/JPY Signal
Risk 0.50%.
Entry should be made before 5pm today London time.
Short Trade 1
Enter short on a next bar break after a pin or engulfing par rejects the level of 103.85, at 1 pip below the low of that rejecting pin or engulfing bar. If a bar closes above 103.90, or more than 1 bar closes above 103.85, do not take the trade.
Move the stop to break even when the trade is 40 pips in profit. Take 50% of the profit at 102.55.
USD/JPY Analysis
Friday’s Non-Farm Payroll data was negative for the USD. Ignore the hype about the fall in the headline unemployment rate; the real story is the record low number of Americans participating in the workforce, which can be seen to have grim long-term implications. Having said that, the USD is not likely to collapse any time soon!
This drove the pair down strongly. The support level of 103.85 that I was talking about last week gave about 35 long pips after the news came out but it broken to the downside last night in one clean break. The long-term bullish trend line that was established last October during the triangle breakout that began the strong upwards move of the past few months has been decisively broken. To top it all, Friday’s daily candle was a strongly bearish outside bar that closed in its lowest quartile:
In summary, we have strongly technical and sentimental reasons to turn bearish of this pair, at least for a while, and the most likely entry I see is at 103.82 where previous support may well become resistance. This will have to be confirmed by price action:
There is no important news due today for either the JPY or for the USD, so today is likely to be fairly quiet, unless there is leftover sentiment from Friday’s data.