USD/JPY: Longer-term bullish trend in serious doubt
Yesterday’s signals were not triggered as the support level at 107.32 was already invalidated by the time New York opened.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be taken between 8am New York time Thursday and 5pm Tokyo time Friday.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 107.32 or 107.86.
- Place 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.
- 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 106.74, 106.43, or 106.14.
- Place 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.
- 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 I was prepared to take a short trade from any of the resistance levels which produced a bearish reversal, but only during the early part of the New York session. After the FOMC releases, the best approach would probably be to fade any spikes at key levels which were relatively far away from the price at the time of the release.
This was neither a good nor a bad call as it gave no opportunity to be acted upon.
The picture now is more bearish as the downwards move has simply continued over the past day on quite normal levels of volatility. These currencies are quite positively correlated these days. The USD was strong after the FOMC release but so was the Yen.
Technically, there are signs that the price is now finding enough support to halt the downwards movement, although it is a little too early to tell. The key fact backing this view is that we have a cluster of three support levels between 106.74 and 106.14, so it may be difficult for the price to get much lower.
I think either long or short trades from reversals at key levels could be good opportunities today, but there will probably be greater potential in long trades.
There is nothing of high importance due today concerning either the JPY or the USD.