USD/JPY: Both currencies are strong
Yesterday’s Signals were not triggered, as none of the key levels were ever reached.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be taken from 8am New York time Wednesday until 5pm Tokyo time Thursday.
Short Trade Idea
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 108.21.
Put 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.
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 107.23 or 107.01.
Put 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.
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 I saw stock markets as increasingly likely to make sharp price falls, which would probably send the price of this currency pair crashing down below the key 107.00 area which has been firm support. This is a pivotal area, so I was ready to take a bearish bias once we get an hourly close below 107.00, using a tight stop loss.
This was enough to stay out of trouble so was a fairly good call, as the supportive area above 107.00 has continued to hold. The consolidation pattern continues, and we are having a recovery in riskier assets today, which is pushing the price up a little.
I think the price will eventually move down, but the safest ways to play this will be to enter short either at a rejection of 109.23 which requires a stronger bullish retracement to happen first, or for a strong breakdown below 107.00. It is quite likely that neither will happen today though.
There is nothing of high importance due today concerning either the JPY or the USD.