My previous USD/JPY signal on 10th January was not triggered, as none of the key support or resistance levels I had identified were reached that day.
Today's USD/JPY Signals
Risk 0.75%.
Trades can be taken before 5pm Tokyo time Thursday.
Short Trade Idea
- Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of ¥131.32, ¥131.90, ¥132.88, or ¥133.28.
- 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.
- Take off 50% of the position as profit when the price reaches 50 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 timeframe immediately upon the next touch of ¥129.60, ¥128.47, or ¥127.51.
- 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.
- Take off 50% of the position as profit when the price reaches 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
This currency pair has been the subject of strong market focus lately, as the Bank of Japan made its monthly policy release earlier today. Some analysts were “expecting” a surprise policy change, but the bank maintained all its current policies (including bond purchases and yield curve control), triggering a sharp fall in the Yen, expressed against the US Dollar as more than 2%.
This pair is dominating the action in the Forex market right now.
The strong bullish movement has pushed the price up to reach an area of former congestion that begins at the resistance level of ¥131.32. This level is holding so far. The more the price can penetrate above that level and even go on to breach higher resistance levels over the near term, the more significant the Bank’s maintenance of policy will be in determining whether the long-term bearish trend in this currency pair survives or not. The main question for traders is whether the downwards price movement will resume, with the current price area as an opportunity to enter a short trade.
As the short-term outlook looks quite uncertain, but as we also have a trend, I will look for a short trade entry from a bearish bounce at ¥131.90, ¥132.88.
If the lower resistance level at ¥131.32 holds over the next 24 hours, that will be a bearish sign that the bearish trend will be very likely to continue.
Regarding the USD, there will be releases of Retail Sales and PPI data at 1:30pm London time. There is nothing of high importance due today concerning the JPY.
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