Yesterday’s signals produced a losing long trade following a bullish bounce at 112.53 by a pin candlestick.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be entered from 8am New York time until 5pm Tokyo time during the next 24 hours only.
Short Trades
· Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 112.40 or 112.93.
· 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.
· Remove 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to run.
Long Trades
· Long entry following a very strong bullish price action reversal on the H1 time frame immediately upon the next touch of 111.70 or 111.39.
· 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.
· Remove 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to run.
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 yesterday that the pair was likely to continue to range, and would probably only be productive to trade for scalpers. However there has been a change in the market’s condition, as a strong Yen comes into focus, driving the price down below support and producing a relatively large move during the Asian session which has just ended. This move has been prompted by the news that the Bank of Japan has reduced its bond purchasing operations, which is suggestive of a surprise minor tightening of monetary policy. It has been enough to produce a more bearish short to medium-term technical picture, with new resistance below 112.50, and the support levels below 112.00 are also now about to be challenged. There is some short-term bearish momentum here, as at the time of writing, so it would be best to be extremely careful about taking any long trades. If the price breaks below 111.39, there could be a much sharper fall all the way down to 110.00. There is no long-term trend, but I do have a bearish bias.
There is nothing important due today concerning the JPY. Regarding the USD, there will be a release of Crude Oil Inventories at 3:30pm London time.