USD/JPY: Yen starting to strengthen
Yesterday’s signals were not triggered, as none of the key levels were reached.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be entered from 8am New York time Thursday to 5pm Tokyo time Friday.
Short Trade Ideas
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 110.77 or 111.82.
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 Ideas
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 109.49 or 108.50.
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 most likely to continue to rise, but I would take trades in either direction from a reversal at a key level. Long trades probably had a slightly higher chance of success.
I was wrong, as the price has taken a downturn and even printed a new lower resistance level, which was a bearish sign. However, this was enough to stay out of trouble.
We might now have seen a major bearish reversal, as although the new short-term downwards trend is not very strong and the USD has recently been very strong, the price looks like it topped out at about 111.50 which is very close to its multi-month high price.
This pair has had relatively low volatility compared to the rest of the Forex market, due mostly to the fact that both of these currencies have been acting as safe havens to some extent.
I am prepared to take a long trade at bullish bounces at either 109.50 or 108.50, or a short trade at a bearish reversal from 110.76, if any of these scenarios set up today. If the U.S. unemployment data due later today is much worse than expected, then we could see a stronger downwards move.
There is nothing of high importance scheduled for today concerning the JPY. Regarding the USD, there will be a release of Unemployment Claims data at 12:30pm London time.