USDJPY: Looking more bearish as 108.75 holds
Yesterday’s signals were not triggered, as unfortunately the bearish price action took place just above the resistance level identified at 108.71.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be entered between 8am New York time Wednesday and 5pm Tokyo time Thursday.
Short Trades
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 108.75 or 109.07.
Put 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 Trade
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 107.50.
Put 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 yesterday that there had been a new support level, but I felt it may be weak as it was within a weekend price gap which was quite likely to get filled.
I thought that if the price could trade for a couple of hours above 108.71, it would be likely to go higher still.
This was a fairly good call although I was not accurate with the resistance which should have been drawn at the quarter-number of 108.75. That was the pivotal point of yesterday and the price has moved down quite firmly ever since that bearish rejection happened. The price has even broken below the (very weak) support level I had identified at 108.32.
These are all bearish signs, but of course the price is still within an area which has seen a slightly bullish consolidation pattern for almost two weeks now. I would not be comfortable taking a real bearish bias until the price makes new lows below 107.80.
Regarding the USD, there will be a release of CPI (inflation) data at 1:30pm London time. There is nothing of high importance due today concerning the JPY.