Yesterday’s signals were not triggered, as the price broke above 112.35 before New York opened.
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 112.83 or 113.56.
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 112.19 or 111.43.
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 markets were looking bearish and it would remain dangerous to trade against the Yen while this persists. This pair was quite trendless and is tending to move backwards and forwards which can make trading it difficult. I had no directional bias.
I was at least partially wrong: the price actually moved up steadily to the next resistance level at 112.83 even while the U.S. stock market moved down to test recent long-term lows. However, the price is now faltering at resistance, and is without any real long-term trend providing a tailwind, so it is quite likely that if the price cannot break above 112.83 over the coming hours, it will turn around and begin to fall. I would be cautiously bearish if the price turns sharply bearish from 112.83 as the New York session gets underway later. Conversely, a sustained break above 112.83 could be a bullish sign, especially if it is accompanied by a strongly bullish move in U.S. stocks.
Be aware the Bank of Japan’s monthly policy release is due towards the end of the Asian session which might cause volatile and very unpredictable price movement.
Regarding the USD, there will be a release of CB Consumer Confidence data at 3pm London time. Concerning the JPY, the Bank of Japan will be releasing their Monetary Policy Statement and Outlook Report late in the Asian session, followed by the usual press conference.