Last Thursday’s signals produced a profitable short trade following the bearish engulfing candlestick rejecting the resistance level identified at 112.93. The trade is effectively over now, but there may be another rejection of the same resistance level, which remains intact.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be taken from 8am New York time until 5pm Tokyo time, over the next 24-hour period.
Short Trades
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 112.93 or 113.26.
- Put the stop loss 1 pip above the local swing high.
- Move 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 Trade 1
- Go long following a bearish price action reversal on the H1 time frame immediately upon the next touch of 111.74.
- Put the stop loss 1 pip below the local swing low.
- Move 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 had been expecting the resistance level at 112.93 to be strong, and when it was finally reached towards the end of last week it did produce a good short trade. However, the price has recovered, and we have seen a meaningful bullish turn over the medium to long-term trends. The chart below shows how the price is now firmly established within a reasonably symmetrical bullish channel, which suggests the price will go on to make another attempt to break up above the resistant area at 112.93. This will be a key area so watch what happens here carefully. There is a very long-term bearish trend line above 113.26, so a sustained break above that level would be a very bullish sign.
There is nothing due today concerning the JPY. Regarding the USD, there will be a release of ISM Manufacturing PMI data at 3pm London time.