USD/JPY: Bearish momentum that might break the 105.00 level
Today’s USD/JPY Signals
- Risk 0.75%.
- Trades may only be taken between 8 am New York time Thursday and 5 pm Tokyo time today.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame time immediately upon the next touch of 105.35 or 106.20.
- 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
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 104.80 or 104.00.
- 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 Pair Analysis
There was no significant change in my technical view of the USD/JPY, as I mentioned yesterday, the trend will remain stable around its current pressures until the US jobs numbers are announced and until the official announcement of the economic stimulus plans for the United States of America. Senate Majority Leader McConnell admitted that no stimulus package would find unanimous support for Republicans. Although we have suggested that if that is the case, official recognition is therefore important. This means that another stimulus bill will require more votes from Democrats, and this means that the bill will likely be larger than it was when Republicans passed it through with a few Democrats. There are new economic and political reasons for another stimulus bill. As the White House and Democrats negotiate, for the first time, there appears to be some progress, including a plan to replace the $600 federal insurance per week. This could pave the way for another financial boost in September or the fourth quarter of 2020. The crack in the Republican Party could have a negative effect on its future electoral fortunes.
The US sees the ADP private-sector jobs estimate. It may undermine the previous month’s massive review and its impact on the market, but is expected to confirm the slowing pace of job growth that economists predicted in the national report at the end of the week. The Bloomberg survey forecasts an average of 1.2 million jobs, nearly half of the initial estimate for June.
The trade deficit of the United States decreased in June for the first time since February as exports recorded a record increase, rising twice as fast as imports. In this regard, the US Commerce Department said that the gap between the value of what the United States buys and what it sells abroad decreased by 7.5% to 50.7 billion dollars in June from 54.8 billion dollars in May. Exports rose by an unprecedented 9.4% to $158.3 billion. Imports rose 4.7% to $208.9 billion.
Global trade collapsed due to the Coronavirus pandemic. Compared to June 2019, total U.S. trade - exports as well as imports - fell 21.9% in June to $367.2 billion. But the two-way trade rebounded from May to June, rising by 6.7% on the back of increased exports and imports of cars and auto parts.
A politically sensitive deficit in commodity trade with China fell 4% to $26.7 billion in June. In June, the United States ran a deficit of $72.2 billion with the rest of the world in commercial goods such as aircraft and devices. But it achieved a surplus of $21.5 billion in trade in services such as banking and education.
I recommend buying the USD/JPY when it overpasses the 104.80 support level.
Regarding the US dollar, unemployed claims will be announced. The Japanese yen is not expecting any important releases today.
