USD/JPY: Stock rally not strongly reflected here
Yesterday’s signals were not triggered as the bearish price action took place a few pips above the resistance level at 108.50.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be entered from 8am New York time Tuesday and 5pm Tokyo time Wednesday.
Short Trade Idea
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 108.54 or 108.98.
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 Idea
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 106.44
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 as long as this pair continues to reject the pivotal resistance level at 108.50 it will continue to look bearish. However, I also expected a lot of volatility and price movement, although I was looking for a short trade from 108.50. This was a good call as we had quite a lot of price movement up and down, and the area (although not the precise level) of resistance around 108.50 did hold.
The U.S. stock market is seeing a strong recovery, but this pair is still unable to get established above 108.50. For this reason, I still look for a short trade, ideally from 108.54, following a bearish reversal. If the price can get established above 108.54, that would be a bullish sign.
There is nothing of high importance due today regarding either the JPY or the USD.