USDJPY: Bearish on risk-off sentiment
Last Tuesday’s signals were not triggered, as there was no bearish price action when the price reached the resistance level identified at 108.77 that day.
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 Ideas
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 108.27, 108.58, or 108.92.
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 107.78 or 107.63.
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 Tuesday that there were plenty of signs that the price would continue to move lower and maybe even reach 108.27. I was ready to take a bearish bias if we had gotten a bearish bounce following a retracement to any of the resistance levels. This unfortunately did not work out as the bearish turn took place between the key levels identified, but I was right to take a bearish bias below 108.77 as we have seen a firm bearish directional movement in this currency pair.
This pair is at the heart of the market now as sentiment turns risk-off with rising tensions between the U.S. and Iran. This is benefitting the Japanese Yen as a traditional safe haven, as we see money flowing into the Yen. The price is approaching multi-month lows and would be particularly bearish below the support level at 107.63 and also of course the psychological level at 107.50.
I would be extremely careful about taking any long trades today and would instead be keen to take a short trade from a bearish rejection of 108.27 or 108.58.
It is hard to see how sentiment will shift to more risk-on unless several days go by without any military action occurring involving U.S. and Iran directly or via proxy. Therefore, I think the bearish conditions here are likely to persist for a while.
There is nothing of high importance due today regarding either the USD or the JPY.