Yesterday’s signals produced a profitable short trade entry, following the bearish pin candlestick which rejected the resistance level at 107.17.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be entered from 8am New York time and 5pm Tokyo time, during the next 24-hour period.
Short Trade
* Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 108.05.
* Place 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 Trades
* Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 107.17, 106.68, 106.44, or 106.13.
* Place 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 wrote yesterday that the price action seemed to be unpredictable and that it might be best to avoid trading this pair. Although the resistance level at 107.17 did hold, the price then made a strong rise over recent hours and may now have flipped that level to become support. Despite the long-term bearish trend, the action overall is now starting to look more bullish, and it is possible to draw a supportive trend line below the key swing lows, as shown in the price chart below. This suggests higher prices, but the action still looks choppy and unpredictable. This pair is now starting to show the highest volatility of all the major Forex pairs, so the best approach will probably lie in trying to catch turns at price extremes in any direction.
There is nothing due today concerning the JPY. Regarding the USD, there will be a release of Crude Oil Inventories data at 3:30pm London time.