USD/JPY: Too much support below 110.00 for bears to break down
Yesterday’s signals produced a long trade from the bullish hourly pin-type candlestick which rejected the support level identified at 109.95. This trade is in floating profit at the time of writing.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be entered between 8am New York time Wednesday and 5pm Tokyo time Thursday.
Short Trade Idea
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 111.11.
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 109.95, 109.54, or 109.25.
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 still saw the potential here as on the short side, so I would look to take short trades from bullish retracements to any key resistance level. I thought also that 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.
This was a great call, as the price continued to fall before making a bullish bounce at 109.95, so things turned out exactly as I expected.
I see price movement here as likely to become harder to predict now, with a period of some kind of consolidation now quite likely. Although there is no sign of an end to the risk-off sentiment in markets driven by fear of an imminent coronavirus pandemic, which could be expected to boost the Yen as a safe-haven asset, the Yen is not advancing as strongly as it might because of the fear that Japan could be hit badly by the virus due to its proximity to the epicentre in China.
It is hard to see the fear over coronavirus dissipating very quickly, this issue is likely to run for at least a few weeks, and it will hit sentiment, so a long USD/JPY trade is really too risky. However, it will be hard to see the price fall much further, so I would avoid trading this currency pair for the time being.
There is nothing of high importance due today regarding either the JPY or the USD.