Last Wednesday’s signals produced a profitable short trade for the minimum 20 pips following the bearish engulfing candle rejecting the resistance level identified at 111.71.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be entered between 8am New York time and 5pm Tokyo time, during the next 24-hour period only.
Short Trade 1
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 112.91.
- Place the stop loss 1 pip above the local swing high.
- Adjust the stop loss to break even once the trade is 20 pips in profit.
- Take off 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to ride.
Long Trades
- Long entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 111.59 or 110.98.
- Place the stop loss 1 pip below the local swing low.
- Adjust the stop loss to break even once the trade is 20 pips in profit.
- Take off 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to ride.
The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.
USD/JPY Analysis
I wrote last week that this pair continues to look bullish provided it holds above the old bearish channel and it has so held, and has continued to rise. Recent hours have seen a break of another resistance level and its flip to become new support at 111.59. I would favour a long trade entry at a bullish bounce here, even if it happens very soon.
The next resistance level is very key, at 112.91, and it is becoming confluent with a very long-term bearish trend line. The other side of that statement is that there is little to stop the price advancing to that level, although it is likely to take the FOMC or NFP releases due later this week to fuel such a rise.
There is a short-term bullish trend, which will become a long-term bullish trend above the 112.91 area.
There is nothing due today regarding the JPY. Concerning the USD, there will be a release of ISM Manufacturing PMI data at 3pm London time, preceded by a minor speech from the Treasury Secretary at 12:45pm.