USD/JPY: Both central banks taking easing measures
Last Thursday’s signals produced a profitable short trade from the hourly pin candlestick which rejected the resistance level I had identified at 106.00. This gave only about 50 pips of profit, so it was not a great trade considering the high volatility level, but at least there was no loss.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be taken between 8am New York time Monday and 5pm Tokyo time Tuesday.
Short Trade Ideas
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 107.48 or 108.59.
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
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 105.68 or 104.09.
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 bearish bias here as long as the price stayed below the resistance level at 104.09. This was at least enough to keep out of trouble as the price quickly broke above that level, and I was right at least in seeing that as a pivotal point.
Recent days have been a roller-coaster ride in this currency pair, but it now seems – as in much of the Forex market – that we are going to see a consolidation in the price, albeit on very high volatility. Both central banks have announced emergency easing measures to deal with the strong economic impact of the global coronavirus pandemic, so neither currency really has an edge over the other, with the Yen acting less as a safe haven over recent days than it usually does.
I see the best strategy to trade this pair today will be to look for reversals from key levels in either direction, with the support at 105.68 looking very pivotal at the time of writing.
There is nothing of high importance scheduled today regarding either the JPY or the USD.