Yesterday’s signals were not triggered as the bearish price action took place slightly above the resistance level identified at 104.87.
Today’s USD/JPY Signals
Risk 0.75%.
Trades must be taken from 8am New York time Thursday to 5pm 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 104.55 or 104.68.
- Place 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.
- 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 Idea
- Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 103.07.
- Place 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.
- 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 we were getting several bearish signs in this currency pair, the odds were with the bears, and the global risk-off market environment was boosting the Japanese Yen which is now the strongest major currency.
I took a bearish bias and would be even more bearish below 104.00.
This was a good call as the price is now even lower and has fallen strongly after making a bullish retracement.
At the time of writing, the price is just a pip or so above the long-term multi-month low price at 104.00, so I see a break below this level as more likely to happen. If the price can get established below 104.00 it will be trading in long-term blue sky and will be likely to fall quickly, to perhaps as low as the next support level at 103.07.
Momentum is with the Yen as risk sentiment sours globally as more G-20 nations are pushed into new coronavirus lockdowns. The Yen is also naturally stronger for domestic reasons.
There is a good short trading opportunity in this currency pair right now.
I will take a short trade from a retracement to a resistance level, or if we get two consecutive hourly closes soon below 104.00 but not too close to 103.07.
Regarding the USD, there will be a release of Advance GDP data at 12:30pm London time. Concerning the JPY, there will be a release of core CPI (inflation) and unemployment rate data at 11:30pm.