Last Thursday’s signals produced a losing short trade following the hourly bearish engulfing candlestick which rejected the key resistance level I had identified at 111.46.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be taken between 8am New York time Monday and 5pm Tokyo time Tuesday.
Short Trades
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 112.09 or 112.65.
Place the stop loss 1 pip above the local swing high.
Move 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 run.
Long Trades
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 111.46 or 110.60.
Place the stop loss 1 pip below the local swing low.
Move 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 run.
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 last Thursday that scalping off the support at 110.60 might be the best approach. I thought that until the price broke above 111.46, it was difficult to be truly bullish on this pair, especially as the U.S. stock market seemed to be continuing its decline.
This was a relatively good call as the price was more bullish than bearish until it finally broke up above the resistance at 111.46 and then really took off, reaching the next resistance level at 112.09 the next day.
Friday saw a large bullish candlestick close near its high at a 50-day high close, which is typically a bullish sign that we will get higher prices. I would therefore remain bullish provided 111.46 holds today and wait for some kind of bullish V formation above 111.46. If the price breaks above 112.10 later, it will be a strongly bullish sign.
There is nothing of high importance due today concerning either the JPY or the USD.