USD/JPY: Short-term consolidation above 105.50
Last Thursday’s signals produced a losing long trade from the bullish pin candlestick which rejected the support level t 105.77.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be taken from 8 am New York time Monday until 5 pm Tokyo time Tuesday.
Short Trade Ideas
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 106.22, 106.43, or 106.62.
- 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
- Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 105.50.
- 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 last Thursday that as there was no real trend, I saw the most likely scenario as the price ranging between 105.77 and 106.43.
I was wrong, as the support at 105.77 broke down later on that day, which I had not expected to happen.
The Japanese Yen has surprisingly been a little stronger against the USD than other major currencies have. Therefore, it seems there is a chance here that the price will eventually break below 105.00 and hit new long-term lows below the probably pivotal support level at 104.87.
The price is now consolidating within a short-term narrowing triangle formation above 105.50. This suggests that the level will be more important. However, even if 105.50 makes a bearish breakdown, I would still expect a bullish reversal somewhere at or above 104.87 to happen next.
I am prepared to take a long trade from a strong bullish bounce at 105.50. I also see the resistance level at 106.43 as likely to be strong, so a short trade there from any bearish reversal could also be an interesting trade.
There is nothing of high importance due today regarding either the JPY or the USD.