USDJPY: Bearish consolidation under 108.51
Yesterday’s signals were not triggered as the price never quite reached the resistance level at 108.51.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be taken from 8am New York time Thursday until 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 108.51, 108.73, or109.07.
Put 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.
Put 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 picture looked considerably less bearish as the price did not seem to want to remain below 108.00 and looked as if it were making a significant bottom. Stock market sentiment is also increasingly positive, and this tends to drive up the price of USD/JPY. However, despite this slight bullishness, there were strong resistance levels nearby which may hold down the price, so I would take a bearish bias at a strong bearish turn at any of the three nearby resistance levels.
None of the levels were reached, and the price made a high just below the nearest resistance level at 108.51, so there is residual bearishness and a long-term bearish trend. However, we have seen several days of consolidation, so a bullish reversal after a bullish break above 108.51 is becoming increasingly likely.
I would still take a bearish bias if there is a strong bearish rejection of 108.51 following another retest of that level.
There is nothing important due today concerning the USD. Regarding the JPY, there will be a minor speech by the Governor of the Bank of Japan at 9:25am London time.