USDJPY: 107.50 looking supportive
Yesterday’s signals were not triggered, as there was no bullish price action when 108.14 and 107.94 were reached.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be taken between 8am New York time Wednesday and 5pm Tokyo time Thursday.
Short Trade Ideas
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 107.94 or 108.14.
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 Ideas
Long entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 107.50, 107.36, or 107.11.
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 there was a ranging environment which suggested bounces off levels in either direction could be equally good trades, but that on the other hand, there was a chance that if the U.S. stock market sold off strongly, the weekend gap here could get filled, and a firm break below 107.94 could see a surprising and sudden move down to 107.50. It was the second scenario which came true, although the stock market did not sell off strongly.
It is true that if the price continues down and starts trading decisively below 107.00, we would be in firmly bearish territory, but the support at the major psychological level of 107.50 looks firm. This is likely to be today’s pivotal point and we will probably see the dominant ranging conditions continue for another day at least.
There is nothing of high importance due today regarding the JPY. Concerning the USD, there will be a release of the ADP Non-Farm Employment Change forecast at 1:15pm London time followed at 3pm by ISM Non-Manufacturing PMI data.