USDJPY: Bearish below 108.96
Last Thursday’s signals were not triggered, as there was no bullish price action when the support level at 109.52 was reached.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be entered between 8am New York time Monday and 5pm Tokyo time Tuesday.
Short Trade Idea
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 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 Ideas
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 108.96 or 108.27.
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 last Thursday that I wanted to see a New York daily close above 109.70 or ideally 110.00 before becoming seriously bullish. The possibility of a major bearish reversal in this area (109.50 to 110.00) remained strong so this entire pivotal zone was still in play.
This was a good call, as the price remained capped by 109.70 over the last few days before breaking lower and starting to look more bearish, while printing new lower resistance at 109.18.
The situation is now more bearish, but we have support close by at 108.96, so the price is currently in a narrow range where bulls and bears will fight it out. It looks as if the bears are going to win.
I would take a bearish bias later if the price can get established below 108.96. Both the Yen and U.S. Dollar are relatively weak currencies, and we are seeing better price movement and trading opportunities in other major Forex pairs such as EUR/USD and GBP/USD.
Concerning the USD, there will be a release of Chicago PMI data at 2:45pm London time. It is a public holiday in Japan today so there are no JPY items scheduled.