USD/JPY: Bullish breakout failed
Yesterday’s signals were not triggered, as there was no bullish price action when 110.69 was reached.
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 Idea
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 111.11.
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 Idea
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 110.12, 109.95, or 109.54.
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 the price was likely to continue falling over the day, and it had quite a long way to go before it will hit any obvious support level, although there was possible minor support at about 111.15.
This was a good call as the price fell quite strongly for most of the day before recovering during the second half of the New York session and rising to reject the round number at 111.00. It has been falling ever since.
The dominant theme in the market is clearly risk-off over fear that there will be a global coronavirus pandemic. This should tend to help both currencies as safe havens but the Yen in particular as it tends to benefit more than the greenback from flights into safety. However, as Japan is proximate to the coronavirus origin in China, the Yen may not act as such as safe haven as could be expected.
Despite these factors, I still see the potential here as on the short side, so I would look to take short trades from bullish retracements to any key resistance level.
The price may well stabilize if and when it gets back below 110.00 as the price was previously comfortable consolidating quietly there for a long time.
There is nothing of high importance due today regarding the JPY. Concerning the USD, there will be a release of CB Consumer Confidence data at 3pm London time