USDJPY: Bearish confluence at 108.06
Yesterday’s signals could have produced a short trade from the bearish rejection of the resistance level identified at 108.06, which is still in play.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be taken prior to 5pm Tokyo time Wednesday.
Short Trade Ideas
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 108.06, 108.28, or 108.43.
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 Ideas
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 107.50, 107.36, or 107.11.
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 I saw the best opportunity for the day as likely to be a short trade down to 107.50 after the price either broke below 107.70 with strong momentum, or after a failure to rise above 108.06 following a retracement – I would take a bearish bias in these cases.
This was a good call as although the recent lows at 107.80 held, the price failed to get above 108.06 twice, failing with a more decisive bearish move down when the trend line shown within the price chart below became confluent with it a couple of hours ago.
The Dollar is getting weaker, and we are not far from long-term lows in this currency pair. If the price now takes out the lows and reaches at least to 107.70 with above-average momentum, I think another test of 107.50 is likely, but this level is probably still strong support, so the downside may well be limited today.
There is nothing of high importance due today regarding the JPY. Concerning the USD, there will be a release of Retail Sales data at 1:30pm London time, followed by minor speeches from the Chair of the Federal Reserve at 6pm and FOMC Member Evans at 8:30pm.