Last Thursday’s signals produced an excellent short trade from the bearish rejection of the resistance level identified at 106.37. It would be wise to have taken profit, or at least most of the profit, by now.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may be entered from 8am New York time until 5pm Tokyo time, during the next 24-hour period only.
Short Trade
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 106.37.
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.
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 Trade
Long entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 104.95.
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.
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 was correct last Thursday to take a bearish bias, with a nice short trade setting up from the resistance level at 106.37. This is the most interesting Forex pair in many ways. It is at the heart of the market, showing the greatest volatility. It is in a strong long-term trend. Over the medium and shorter terms, it is in an interesting technical position: there is a very wide and symmetrical bearish channel which is currently holding the price between about 107.00 and 105.00. The support at 105.86 has been invalidated, so now I look to the lower trend line of this channel as possible support. As it is so confluent with a major psychological round number at 105.00, it has a good chance of holding and producing a bullish move. The momentum is with the bears, but on the other hand, it can be seen that the price truly is reluctant to make new major lows, and the recent lows can be connected by an ascending trend line which may be supportive. A break below 105.50 would be a bearish sign. I maintain my bearish bias but acknowledge that the lows look like they have a good chance of holding.
There is nothing due today concerning either the JPY or the USD.