USD/JPY: Consolidating between 108.62 and 109.18
Yesterday’s signals were not triggered, as none of the key levels were reached yet.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be taken from 8am New York time Tuesday to 5pm Tokyo time Wednesday.
Short Trade Ideas
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 109.18 or 109.74.
- 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
- Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 108.62 or 108.27.
- 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 as the market is spooked by the spread of the Chinese coronavirus which may well cause damage to the Chinese economy, so money is flowing into risk-off assets, especially the Japanese Yen. For this reason, I would continue to seek short trade in this currency pair from retracements to resistance levels.
Over the past 24 hours, the price has failed to fall any further, and has simply consolidated between 108.62 and 109.18.
Despite this consolidation, it still feels like there is scope for more fear over the damage the coronavirus may cause, and this is likely to cause fresh and possibly sudden flows into the Yen. For this reason, I continue to see a short trade from a bearish bounce at any resistance level as the best strategy for trading this pair at present.
Concerning the USD, there will be a release of CB Consumer Confidence data at 3pm London time. There is nothing of high importance due today regarding the JPY.