USDJPY: Period of consolidation likely
Yesterday’s signals were not triggered as there was no bearish price action when any of the key resistance levels were reached.
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 Trade Ideas
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 106.73, 107.21, or 107.26.
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.
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
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 106.24, 105.83, or 105.69.
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.
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 if the price could get established below 105.00 it would be likely to fall again sharply all the way to 103.80, but the 105.00 area may hold for a while. A lot was likely to depend upon the U.S. stock market and whether it started to sell off more sharply, which would tend to strengthen the Yen.
I was correct to see the 105.00 area as likely to be pivotal, and for the fate of this currency pair as being very closely linked to the U.S. stock market. Yesterday the price reached close to 105.00 and was looking bearish when the U.S. announced that the new tariffs on Chinese goods would be delayed. The S&P 500 Index rose by about 1.5% over the day and this pair followed in an upwards direction as market risk sentiment improved.
We have a double top at 106.73 which is quite likely to hold for a while. Today’s pivotal point will probably be 106.24 so a long trade from there could be a good opportunity and I would take a bullish bias if we get a solid bullish bounce off that level later, but only as far as 106.73.
There is nothing of high importance due today concerning either the JPY or the USD.