USDJPY: Bullish above 109.50
Last Thursday’s signals were not triggered as there was no bearish price action when the resistance level identified at 108.94 was reached.
Today’s USD/JPY Signals
Risk 0.75%.
Trades may only be entered between 8am New York time Monday and 5pm Tokyo time Tuesday.
Short Trade Idea
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 109.96.
Put 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.
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 Idea
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 108.96.
Put 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.
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 last Thursday that there was no long-term trend and the price was becalmed. This suggested that key support or resistance levels nearby were likely to hold so I took no directional bias on this currency pair that day. This wasn’t a great call as the price actually made a move up and broke the nearest resistance level on a rumour that the U.S. and China were about to conclude at least part of a trade deal.
Part one of the trade deal was confirmed on Friday although there is a lot of work still to be done. This has produced a “risk on” environment which has seen this currency pair get a little more bullish. The problem is that both the USD and the JPY are relatively weak in this environment, with the USD just a little stronger. The JPY is certainly weak, but it is probably best traded right now in its crosses with riskier currencies than the USD.
It is a little early to tell, but we may be seeing the price revert to ranging again as there is a sign that there is new lower resistance at 109.50.
I will sit tight on this pair today, but I will take a bullish bias at the end of today if we see a New York close above 109.50.
Concerning the USD, there will be a release of Flash Manufacturing PMI data at 2:45pm London time. Regarding the JPY, there is nothing of high importance scheduled for release today.