USD/JPY: Long-term double bottom at 104.00 possible
Yesterday’s signals were not triggered, as there was no bearish price action when the resistance level identified at 104.87 was first reached.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be taken from 8 am New York time Wednesday to 5 pm Tokyo time Thursday.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 105.39 or 105.81.
- 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 or 104.37.
- 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 I thought the edge would now be the bullish side, so I was prepared to take a long trade from a firm bullish bounce at 104.37, or if we had gotten two consecutive hourly closes above the nearest resistance level at 104.87 after New York opened.
We did get the closes above 104.87 but the price only rose by about another 15 pips from there and is now slightly worse than the entry-level that gave.
I was correct to see the edge on the bullish side as the price rose yesterday. We now see the former resistance level at 104.87 as likely to be new higher support so this level will probably be pivotal again today.
The U.S. stock market is also firming up and beginning to rise and overcome resistance, so overall we see a somewhat more bullish situation here. However, I do not have much confidence any bullish move will be fast or strong – if it plays out, it may well be slow.
I would look to take a long trade from a bullish bounce at a support level, only – not on breakouts but following a pullback.
Concerning the USD, there will be a release of Flash Manufacturing & Services PMI at 2:45 pm London time, followed 15 minutes later by testimony from the Chair of the Federal Reserve before Congress. There is nothing of high importance scheduled today concerning the JPY.