USDJPY: Bearish breakout below 108.00
Yesterday’s signals were not triggered as there was no bullish price action at 108.20.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be entered from 8am New York time Thursday and 5pm Tokyo time Friday.
Short Trades
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 107.90 or 108.16.
- 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 Trade
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 107.50.
- 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 the price was continuing its narrow consolidation between 108.20 and 108.75. This was not surprising as we were awaiting central bank input for both currencies, and this was likely to produce a breakout from this range. In which direction is anyone’s guess, so it I thought that it was probably better to stand aside until after the releases and hope things became clearer.
This was a good call as we did get this breakout after the FOMC release and it was bearish as the FOMC’s more dovish approach towards rate hikes was signalled and this has pushed down the U.S. Dollar almost everywhere, sending the price of this pair down to 107.50 a few hours ago, where the price found some support at this psychologically very big quarter-number.
The picture now is more bearish as there is momentum behind the Japanese Yen, but the future will now depend probably upon whether the U.S. Dollar continues to weaken or recovers. The price has certainly pulled back from 107.50. I would take a bearish bias if the price makes a strong bearish bounce at either of the two nearby resistance levels shown in the price chart below.
There is nothing of high importance due today regarding either the JPY or the USD.