Yesterday’s signals produced a profitable long trade entry following the bullish doji candlestick on the hourly time frame which rejected the support level identified at 111.66. It would probably be a good idea to take profits now as the price has reached the top of the bearish price channel shown in the chart below.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be taken between 8am New York time and 5pm Tokyo time, during the next 24-hour period.
Short Trade
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 112.83.
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 ride.
Long Trades
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 111.66, 111.43, 111.31, or 110.89.
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 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 that I expected that the USD/JPY would continue as a proxy for the U.S. stock market, and if stocks sold off strongly later then we could expect this pair to fall further. However, bears needed to note the cluster of support plus the bottom of the price channel shown in the chart below from about 111.43.
This wasn’t a bad call as the stock market did not sell off heavily, and the price made a bottom at the nearest support level of 111.66 before rising a little. The cluster of support at and close below 111.66 looks like it will be hard to break, so the line of least resistance is likely to switch to bullish once the price breaks out of its current bearish channel. I would be bullish later if the price can break above the upper channel trend line here, although the U.S. stock market still looks nervous and a strong sell-off there later remains likely to push the Yen up.
There is nothing important due today concerning either the JPY or the USD.