USD/JPY: Key Forex pair to watch
Yesterday’s signals produced a nicely profitable short trade from the bearish rejection of the resistance level I had identified at 105.66, which gave a maximum reward to risk ratio so far of approximately 2 to 1.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be taken from 8am New York time Wednesday until 5pm Tokyo time Thursday.
Short Trade Ideas
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 105.66 or 106.00.
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 103.66 or 103.07.
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 we were likely to see continuing small movements in the price but as long as it stays between 103.48 and 105.00, we have no more directional clues. I took no directional bias on this pair for the time being, but nimble traders on short time frames are likely to see plenty of tradable directional swings. This was a great call as these areas held and continue to contain the price which is consolidating in wide swings.
Although this pair still remains very vulnerable to the downside, the dominant consolidation pattern is bullish. I would be more bullish above 106.00 and more bearish below 103.50. There is high volatility, fear, and near-panic in financial markets, and this is pretty certain to continue for several days. This pair remains the main focus of the market so traders should focus on trading the swings with small position sizes on short time frames and staying nimble.
There is nothing of high importance due today regarding the JPY. Concerning the USD, there will be a release of CPI (inflation) data at 1:30pm London time.