USD/JPY: Unpredictable price action
Yesterday’s signals were not triggered, as there was no bearish price action when the price first reached 105.69.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be entered from 8 am New York time Tuesday and 5 pm Tokyo time Wednesday.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 105.78, 106.21, 106.41, or 107.07.
- 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 104.87.
- 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 the technical picture looked very uncertain. It felt wrong to call any direction, so I wanted to stand aside from trading this pair.
The key point I saw in this currency pair was that between 104.87 and 107.07, the price action looked unpredictable, so it may be wise to wait for the price to break out of this range one side or another.
I think this was a good call as the technical picture is now no better, the price is moving erratically with low volatility and there are no obvious opportunities or directional movements.
There may be a chance later for a short trade from the nearby resistance level at 105.78. I will take this if we get a strong rejection there and the level holds until the New York session, but I would monitor the trade carefully in a short time frame.
A long trade from a bounce at 104.87 could also be a great opportunity, in the unlikely event that the price reaches that level later today.
Concerning the USD, there will be a release of ISM Manufacturing PMI data at 3pm London time. There is nothing of high importance due today regarding the JPY.