Yesterday’s signals were not triggered as the bullish price action took place below 105.23.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be taken between 8 am New York time Thursday and 5 pm Tokyo time Friday.
Short Trade Ideas
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 105.30, 105.81, or 106.08.
- 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 104.87 or 104.37.
- 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 there was no change to the prevailing situation and I would take the same approach to this currency pair – look for a short trade from a reversal at 106.08 or a long trade from a reversal at 104.87.
This has been enough to stay out of trouble and in a sense has been proven to be a correct approach as so far neither level has even been reached.
However, the technical situation is beginning to show signs of changing in a more bearish direction, with the new lower resistance at 105.30 looking pivotal we could also draw a solid bearish trend line in the price chart shown below holding the current downwards wave.
The bearishness is due to the fact that markets are taking a more risk-off sentiment now, producing a flow into the Japanese Yen. Of course, this flow is stronger in the Yen crosses.
Despite the more bearish outlook, we still have not reached the strong long-term support at 104.87 or even the round number at 105.00, both of which are very capable of producing a long or medium-term bullish trend reversal.
I am prepared to take a short trade from 105.30, but I would watch very carefully what would happen to any open trade at 105.00 or 104.87. I would also be prepared to take a long trade from a bullish bounce at 104.87 if it happens later.
There is nothing of high importance due today regarding the JPY. Concerning the USD, there will be a release of Unemployment Claims data at 1:30 pm London time.