USD/JPY Signal- Dec. 9, 2013



USD/JPY Signal Update

Thursday’s long trade signal was triggered by a pin bar on the hourly chart rejecting the bearish descending trend line marked in pink in the chart below, marked at (1):

USDJPY Signal 12913

It was recommended to take enough profit at 101.95 to take the risk off the trade, unfortunately this was very close to the entry so would have necessitated closing almost all the trade for just 3 or 4 pips profit if followed literally. However the trade would at worst have broken even, as the second profit target of the lower bullish ascending trend line was not hit, the price reversing bullishly instead at 101.61.

The signal gave an entry at about 102.00 and made about 38 pips profit, for a risk of about 32 pips profit, so it did provide an opportunity for reward slightly greater than risk.

Today’s USD/JPY Signal

Risk 0.50%

Entry should be made before 8am tomorrow morning London time only.

Enter long at the next bar break of an hourly pin, strong engulfing or outside bar rejecting and closing above both the support level of 102.82 and the GMT daily pivot point at 102.70. If both of these points are not touched and rejected by the same hourly bar, or if an hourly bar closes below one of these levels, the trade is immediately invalidated and should not be taken.

Stop loss at the local swing low.

Take profit on 75% of the position at 103.23 and move the stop to break even. Take the remainder of the position as profit when the price is 10 pips away from the next trend line above.

USD/JPY Analysis

During the late New York session an FOMC Board Member is speaking, and late during the next Tokyo session there is an important Chinese economic data release. These events may make the price move strongly but the market is likely to be otherwise quiet today. I was expecting a move down to 101.00 before we tested 103.37 again, however this is strongly called into question by the fairly strong rejection and reversal from 101.64, which was a resistance point now turned into strong support, and the bullish news for the USD that was given at the end of last week. There was resistance as previously noted at 102.81. It is too early to tell conclusively but after holding for a little while towards the end of Friday’s trading, it seems that this level has also flipped from resistance to support. The conjunction of these bullish signs coupled with the uncertainty of higher price levels leaves me with a bullish bias, prepared to go long at a suitable rejection from a retest of 102.82 from above, provided the daily pivot is confluent.


Adam is a Forex trader who has worked within financial markets for over 12 years, including 6 years with Merrill Lynch. He is certified in Fund Management and Investment Management by the U.K. Chartered Institute for Securities & Investment.