USD/JPY: New 3-year low price
Last Thursday’s signals were not triggered, as there was insufficiently bullish price action at all of the identified support levels which were reached that day.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be taken from 8am New York time Monday until 5pm Tokyo time Tuesday.
Short Trade Idea
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 103.48.
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 100.84, 100.00, 99.50, or 99.00.
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 last Thursday that I took a cautiously bearish bias between 107.73 and 106.44 but would prefer to see a significant bullish retracement before entering any additional short trades.
This was a good and profitable call as the price continued to fall throughout the day and was even able to break below 106.44 with ease.
The big, clear story right now is panic in the financial markets, with stocks and risky assets being dumped in favour of safe haven assets such as the Japanese Yen and Swiss Franc. The moves are dramatic and reminiscent of the 2008 financial crash. It seems very likely that central banks, including the Federal Reserve, are going to be pushed into more emergency measures implementing further rate cuts and quantitative easing.
Bottom line: there is no reason to be bullish at all and volatility is very high. It is very likely the price will fall further and price action over the short term will be dominated by downwards impulsive moves. The best strategy to trade this pair, which is the key Forex currency pair right now, is to either wait for a reversal at 103.48 on higher time frames such as the hourly, or to trade reversals from bullish pullbacks on very short time frames. Position size should be kept low due to the high volatility.
There is nothing of high importance due today regarding either the JPY or the USD.