USDJPY: Weakly bearish below 109.52
Yesterday’s signals were not triggered, as there was no bullish price action at 109.50 after New York opened.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be entered between 8am New York time Wednesday and 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 109.52 or 109.96.
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 Idea
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 108.96.
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 I took a weakly bullish bias above 109.50 and would take a more decisive bullish bias on this pair if the New York close was higher than 109.55.
This was a good call as these prices do seem to have been pivotal, with the price declining slightly still below 109.52.
Volatility here is extremely low, with the price moving by hardly more than 1% over the past 20 days.
The price area between 109.50 and 110.00 has been extremely pivotal for a while, so despite the low volatility, we may be seeing an opportunity setting up here – either for a short trade back down to the 108.00 area at least, or for a long-term bullish breakout above the 109.70 to 110.00 area.
The bullish side probably has more potential, but a problem for bulls is that the U.S. Dollar, despite recovering this week, has begun a long-term bearish trend. So, although the Japanese Yen is probably the weakest major currency over the long-term, the price is finding it hard to move up despite the U.S. stock market hitting all-time highs which typically boosts the USD.
For these reasons, I would avoid trading this pair unless we see a strong bullish move with a New York close above 109.70, which would cause me to take a bullish bias if it happened.
Concerning the JPY, there will be a release of the Bank of Japan’s Monetary Policy Statement towards the end of the Tokyo session today. Regarding the USD, there is nothing of high importance due today.