USDJPY: Volatile without clear direction
Yesterday’s signals produced a profitable long trade from the doji hourly candlestick which rejected the support level at 105.69, although the profit only went as far as the resistance at 106.73 which has held very firmly so far.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be taken from 8am New York time Thursday until 5pm Tokyo time Friday.
Short Trade Ideas
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 106.73, 107.21, or 107.26.
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.
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 Idea
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 105.69.
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.
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 we had a double top at 106.73 which was quite likely to hold for a while, and that the day’s pivotal point would 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.
I was right about the resistance at 106.73 and about looking for a long trade, but I was wrong about 106.24 being the key level, instead it was 105.69.
Looking at the price chart below, despite the long-term bearish trend, it looks clear that bulls and bears are very evenly matched, with both 105.69 and 106.73 looking very solid.
I think the price will again reach 105.69 and if the price gets established below that level it could test the recent lows just above 105.00 again or even break lower than that. There is a lot of volatility coming into the market as stock markets around the world, including the U.S.A., begin to sell off heavily, which tends to correlate with flows out of the USD and into the JPY. So, I would take a bearish bias if the price is below 105.69 and falling with good momentum at 10am New York time.
There is nothing of high importance due today concerning the JPY. Regarding the USD, there will be releases of Core Retail Sales, Retail Sales, and the Philly Fed Manufacturing Index at 1:30pm London time.