USD/JPY: Time to get interested in the Japanese Yen
Yesterday’s signals were not triggered, as the bullish price action took place slightly below the support level identified at 104.87.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be entered between 8 am New York time Thursday and 5 pm 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 104.87 or 105.39.
- 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 104.09.
- 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 saw short-term day trading opportunities short between 105.39 and 105.00, but I would be careful being short below 105.00 until an hour after the FOMC release.
This was a great call as the price continued to fall to 105.00 before the release but bounced back after the release before falling again.
If the price remains in its current area, we will see a long-term bearish breakout – there are no other major currencies making such technically significant new long-term highs or lows against the Dollar.
The Yen typically benefits as a safe haven when markets are overcome by risk-off sentiment, and this is happening now to some extent. However, we are also seeing standout, independent relative strength in the Yen, which is unusual.
The Yen against the Dollar has been notably flat for a long time, with no trend and very low volatility. Such prolonged periods typically lead eventually to strong directional movements, and we may now be seeing this here, so there may be considerable potential now on the short side.
This currency pair is worth keeping a close eye on. There is bearish momentum, not very strongly but it is there, on all time frames. The price has room to fall all the way to new multi-month low prices, and is then in the blue sky, with no support until it gets just a few pips above the round number at 104.00.
I will take an enthusiastic bearish bias if we see a daily (New York) close below 104.75.
There is nothing of high importance regarding either the USD or the JPY.