Yesterday’s signals triggered a long trade from the engulfing candlestick on the hourly chart which rejected the support level identified at 111.94. Although this trade is currently slightly in profit, I am not optimistic about it and it would probably be wise to monitor it very carefully or move the stop loss to break even as stock markets look very shaky which might trigger further flows into the Japanese Yen.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be taken from 8am New York time until 5pm Tokyo time, over the next 24-hour period only.
Short Trades
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 112.36 or 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 111.94, 111.66, 111.43 or 111.31.
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 I expected this pair would continue to be driven by the U.S. stock market, but the most logical opportunity would now look to be a long trade entry from 112.36. I still am reluctant to take any definite directional bias in this tight, range-bound market environment.
This probably wasn’t very helpful, with the price breaking cleanly below 112.36 before finding support later at 111.94. The U.S. stock market fell strongly yesterday, and this helped drive the price down here. I think as the stock market still looks very vulnerable, now reaching its price from six months and go and heading lower, we are more likely to see sudden flows into the Japanese Yen, which would make taking any long trades in this pair very dangerous. I would only want to take short trades here from bearish reversals at key resistance levels. I would take a bearish bias if we get a stronger bearish reversal later at 112.36.
There is nothing important due today concerning the JPY. Regarding the USD, there will be a release of Core Durable Goods Orders data at 1:30pm London time.