USDJPY: Strong resistance levels at 108.72 & 109.00
Yesterday’s signals were not triggered, as the resistance level identified at 108.72 was only reached after the end of the specified time slot.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be entered 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 108.72, 109.00, or 109.48.
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 Ideas
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 108.07, 107.77, or 107.63.
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 the price was ranging in a very pivotal area, with strong multi-week resistance overhead, but did not seem to ready to fall yet. I thought that the nearby support and resistance levels were likely to hold, so either a long off 108.07 or a short off 108.72 would probably be OK trades.
This was a good call as the levels held as expected. We’ve had a test of 108.72 which has continued to hold as resistance. We can say that the short-term price action is more bullish.
Overall, the really key development to watch out for in this currency pair will be if the price can get established above 109.00, which would be a very bullish development. However, something strong will probably have to happen with the U.S. Dollar to make that happen and it is hard to see where such a development will come from this week. Therefore, the best opportunities here are likely to be short trades from 108.72 or 109.00, but again, the price may not be ready to fall much unless there is some news that spooks global stock markets.
I take no directional bias on this currency pair for now.
There is nothing of high importance due today concerning either the JPY or the USD.