USD/JPY: Former key level at 106.43 invalidated
Yesterday’s signals were not triggered, as the bearish price action took place above the key resistance level which had been identified at 106.43.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be taken from 8 am New York time Wednesday to 5 pm 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 106.62, 106.79, or 107.24.
- 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 106.22, 105.88, or 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 yesterday that if the price could get established above 106.43, that would be a bullish sign, and suggest a further rise was more likely than not.
This was not a good call as after the price broke above and invalidated that level, it turned bearish.
I also said that the price action was probably going to be choppy and mostly difficult and unrewarding to trade.
Nevertheless, the technical picture has become somewhat clearer, as we now see a bullish price channel begin to emerge. Price channels are typically a good indicator, although this one may be relatively unreliable as it does not look like it is fully symmetrical.
There is some short-term bearish momentum and the support level at 106.22 will probably be tested.
The potential opportunity which stands out from the price chart below would be a long trade from 105.88 as it a horizontal level confluent with a trend line. I will be happy to take that trade if it sets up.
There is nothing of high importance due today regarding either the JPY or the USD.