USDJPY: Wide bearish price channel
Yesterday’s signals were not triggered, as there was no sufficiently bullish price action at 108.69 or 108.45.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be entered from 8am New York time Wednesday to 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 108.45, 108.86, or 109.13.
⦁ 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 108.27, 108.06, or 107.78.
⦁ 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 the ranging environment was likely to persist here, with the best opportunity likely to arise from a rejection of any extreme level, such as the support at 108.27 or the resistance at 109.13 (109.48 would be even better). This was enough to stay out of trouble during the choppy, weakly bearish price action we saw over the past day.
The USD and JPY are tending to move together at present, with the Yen prone to more occasional strength than the Dollar. This suggest more ranging and choppy action, but there is perhaps a stronger bearish case now as the price chart below shows a fairly wide symmetrical bearish price channel. The price channel means that 108.06 currently looks an attractive entry point for a long trade while 108.86 looks best placed to produce a good short trade entry. I would be prepared to take either trade if it sets up with a firm rejection in price action. The short trade would be more attractive.
There is nothing of high importance due today concerning the JPY. Regarding the USD, there will be a release of FOMC Meeting Minutes at 7pm London time.