Yesterday’s signals produced a long trade during the Asian session following the bullish outside candlestick on the hourly chart which rejected the support level at 112.72. This trade is still open but is not in profit. As the U.S. Dollar is getting hit today, I am not optimistic that this trade will turn around and become profitable later.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be taken between 8am New York time and 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 113.08 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 112.72 or 112.19.
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 a bearish retracement to 112.72 looked likely, although we may have found support at the round number of 113.00 before that. I had no directional bias.
This was a good call as the price did retrace to 112.72, where it bounced bullishly practically to the exact pip. It was also good not to have a directional bias as even though there is a very weak long-term bullish trend, this pair has been tending to range for a long time.
The U.S. Dollar has been hit today, which means the bullish bounce at 112.72 is struggling to rise, but there are some initial signs at the time of writing that the USD may be starting to gain back some ground.
The real action is in the British Pound and the Euro. However, if the price continues to rise from the base area at 112.72, bulls might be encouraged enough to try to ride that long towards the resistance at 113.56. The problem though is that there is a new possible lower resistance level at 113.08. Therefore, I would avoid trading this pair today.
There is nothing important due today concerning the JPY. Regarding the USD, there will be a release of ISM Manufacturing PMI data at 3pm London time.