USD/JPY: Pivotal Point at 107.53
Yesterday’s signals as none of the key levels were reached yet.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be taken between 8am New York time Wednesday and 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 108.54 or 108.98.
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 106.44 or 106.08.
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 as the price was still unable to get established above 108.50, I would keep looking for a short trade, ideally from 108.54, following a bearish reversal. This was a good call at least insofar as the level held and the price moved down over the day to close at a new long-term low closing price.
The situation is the same here – there is a long-term bearish trend, even though the U.S. stock market is seeing some recovery, which is holding below new lower resistance levels. These are all bearish signs, so I remain bearish, especially if the price stays below the nearby resistance at 107.53. Unfortunately, the price is sitting too close to this level for it to be useful, but even if we get a retracement to 108.53, I would still be basically bearish on this currency pair if that resistance level holds.
I would take a short trade from a rejection of any resistance level. In the unlikely even that the price can get established above 108.53 today, that would be a bullish sign.
There is nothing of high importance due today regarding the JPY. Concerning the USD, there will be a release of the ADP Non-Farm Employment Change at 1:15pm London time followed by ISM Non-Manufacturing PMI data at 3pm.