USDJPY: Bearish pullback in bullish wave
Yesterday’s signals were not triggered, although the bearish price action made a high just 1 pip below the resistance level at 108.18 a few hours ago.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be taken from 8am New York time Thursday to 5pm Tokyo time Friday.
Short Trade Ideas
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 108.18, 108.43, 108.71, or 109.00.
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 107.57, 107.48, 107.26, or 107.21.
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 higher prices over the course of the day looked likely. I was ready to take a bullish bias if we had gotten a retracement to 107.57 and a firm bullish bounce there after New York opened. This was a good call as the price did go on to rise over the day and make a new 1-month high. However, the price is making a bearish pullback after making a high just 1 pip below the resistance level at 108.18, and there may be lower resistance below that at 108.00.
The bearish retracement looks like a normal pullback within a bullish structure. However, we have major U.S. inflation data which will be released very soon, and this currency pair is likely to be very sensitive to that. If inflation is higher than expected, we could see the price jump strongly. We are reaching an interesting price area now, as the 109.00 area marks multi-month high prices, so it will probably be hard for the price to get beyond that.
I prefer long trades and I would be prepared to take a bullish bias if we get a solid bullish bounce at any of the support levels today.
Regarding the USD, there will be a release of CPI (inflation) data at 1:30pm London time. There is nothing of high importance due today concerning the JPY.