USD/JPY: Pivotal point at 109.50
Yesterday’s signals were not triggered as there was insufficiently bearish price action at 109.95 although that level did act as the high of the day to the exact pip.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be taken from 8am New York time Tuesday until 5pm Tokyo time Wednesday.
Short Trade Ideas
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 109.95, 110.12, or 110.69.
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 109.54, 109.25, or 108.99.
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 yesterday that trading would be light in this currency pair due to New York being on holiday, so I wanted to avoid taking any trade here yesterday. This worked out OK as there were no strong opportunities yesterday due to low volatility, although my forecast resistance level at 109.95 held to the pip as the high of the day so that was very accurate.
There is no reason I can see to change my approach: there is a long-term bullish trend here, and a strong bullish breakout to new long-term highs could be a very interesting long trade to be involved in. We may also see a strong failure here, as this area around 110.00 is likely to remain pivotal.
I think the best approach here today will be to fade any failed bullish breakout which touches 110.12 but where the price quickly gets back down to a level below 109.95, as long as the volatility gets higher when this happens. Alternatively, if the breakout holds and we get a New York close above 110.18 today, I will take a bullish bias as this would indicate still higher prices were the most probable short-term outcomes.
There is nothing of high importance due today regarding either the JPY or the USD.