USDJPY: Strong resistance at 108.43 holds
Yesterday’s signals were not triggered, as the bearish price action took place a little way above the resistance level at 108.43.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be taken between 8am New York time Thursday and 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 108.43, 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 107.46, 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 this pair was likely to react sharply to the FOMC releases due later. I saw the best potential here as a spike up to a key resistance level followed by a fast, bearish reversal short trade entry, the closer to 109.00 the better, following the FOMC releases.
This was a good call as although there was no post-FOMC spike, the price moved down quite sharply from the 108.43 area. The move is now stabilizing, and we have the same broad technical picture: weakly bullish, but bearish from the zone between 108.43 to about 109.00.
I would keep looking for short trades from areas above 108.43 as the medium-term upwards trend still seems to be valid, but not strong enough to break above this pivotal zone of long-term resistance.
I would be happy to take a bearish bias later on this currency pair following any bearish reversal at a key resistance level.
There is nothing of high importance due today concerning the JPY. Regarding the USD, there will be a release of Philly Fed Manufacturing Index data at 1:30pm London time.