USDJPY: Bearish on risk-off sentiment
Yesterday’s signals were not triggered, as there was no bearish price action when 108.27 was reached.
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 1H1 time frame H1H1H1 time frame immediately upon the next touch of 108.58, 108.92, 109.00, or 109.18.
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 108.27 or 107.78.
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 I would be extremely careful about taking any long trades and would instead be keen to take a short trade from a bearish rejection of 108.27 or 108.58.
I thought that risk-off sentiment would persist for a few more days, but I was wrong. Risk sentiment has improved quite quickly as the market has adjudged an immediate Iranian military action is not likely. This pair is often a reflection of risk sentiment, rising and falling in line with the U.S. stock market.
Technically, we are seeing a bullish rejection of the lower edge of the prevailing price range between about 107.50 and 110.00 which has held the price over several months.
This pair will likely be in the spotlight today and looks more likely to rise than fall, so I will take a bullish bias if we get a firm bullish bounce at any of the support levels identified above.
If the price can get established above 108.58 that would be a further bullish sign.
There is nothing of high importance due today regarding the JPY. Concerning the USD, there will be a release of ISM Non-Manufacturing PMI data at 3pm London time.