Yesterday’s signals were not triggered, as none of the key levels were ever reached.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be entered from 8am New York time to 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.
· 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 bullish price action reversal on the H1 time frame immediately upon the next touch of 106.68, 106.44, or 106.13.
· 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 yesterday I remained bullish above 106.68, but bulls will also want to see the psychological level at 107.50 broken over this week to remain confident. The price has remained above 106.68, but the technical picture looks a little less bullish as the price is now starting to carve out a bearish price channel, drawn in the price chart shown below. This is not a reason to turn bearish yet. The key thing to watch for in this pair is the effect of the U.S. data due later. If 106.68 holds after those releases, then it will be a bullish sign. It still feels as if the line of least resistance is upwards, but 107.50 may continue to be an obstacle. Alternatively, a break below 106.43 would be a bearish sign.
Regarding the USD, there will be a release of CPI data at 1:30pm London time, followed by Crude Oil Inventories at 3:30pm and the FOMC Meeting Minutes at 7pm. Concerning the JPY, the Governor of the Bank of Japan will be speaking at the quarterly branch manager’s meeting of the BOJ.