USDJPY: Weakly bearish but key support close
Last Thursday’s signals were not triggered as the bearish rejection of the resistance level identified at 108.94 unfortunately took place a couple of hours before the New York open.
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 108.94.
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 or 108.06.
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 what would happen was likely to be determined by whether the price got established above 109.00 (bullish) or below 108.75 (bearish) – these were the day’s likely pivotal points. This was a great call as the resistance just below 109.00 held and the price moved down over the day.
The technical picture and short-term momentum continue to be weakly bearish, but the area between 108.27 and about 108.40 has acted as effective support over recent days. We may be in a deep bearish pullback within a weak long-term bullish trend, so I see the best potential opportunity here as a long close to 108.27 if we get a firm bullish reversal at or close to that price. If it happens, I would take a cautiously bullish bias. If the U.S. stock market index goes on to make new all-time high prices, that would probably help bulls here.
There is nothing of high importance due today concerning either the JPY or the USD.